KUALA LUMPUR: iPay88 Holding Sdn Bhd has proposed a more constructive profit-based tax rather than an industry-wide based (digital) tax that could possibly be announced for the digital industry in the upcoming Budget 2019 on Friday.
Co-Founder and Executive Director Chan Kok Long in a statement today said the digital industry in Malaysia was not ready for a digital tax, with the sector still struggling to turn in a profit.
“The fintech industry, for example, has made inroads in disrupting the financial industry and changing the way it does business.Yet, the players are still investing in the business, rather than making a profit,” he added.
Chan said the digital industry marketplace was still in its infancy in Malaysia and many companies within it were still trying their best to break-even.
He said the taxation of a young industry would lead to the players looking for greener pastures in neighbouring countries, which would be a loss to Malaysia.
“The introduction of a digital tax at this point will hinder innovation and growth of the industry in comparison to international players entering the market,” he added.
Chan acknowledged the need for the government to collect tax, but pushed for a profit-based tax instead of industry-based.
“For example, international players should be taxed as they have established themselves and are able to expand into different countries.
“We believe the government should set a margin-based profit tax to enable the industry to mature into a fully-developed economy.
“We also hope the government will do an in-depth study into the industry and its challenges before implementing a digital tax and without putting up a barrier to the growth of the industry,” he added. - Bernama