Foreign online services must register with Customs for taxation

PETALING JAYA: Foreign online services operating locally will now be required to register with the Customs Department for the relevant service taxes, says Finance Ministry's National Budget Office director Johan Mahmood Merican.

"The government will basically engage with the larger online services, who will then need to register with Customs if they want to continue supplying those services to Malaysian consumers.

"So this is an announcement. We will work out the details and guidelines, which we will then communicate to these companies," he was quoted as saying in a report by MalaysiaKini.

Johan made the announcement during a press conference held after a briefing on Budget 2019 and the 11th Malaysian Plan mid-term review at the Communications and Multimedia Ministry in Putrajaya on Nov 7.

According to Johan, the new tax on foreign online services, which has been slammed by various quarters, was to ensure a level playing field with local online services.

"I don't want to go into individual companies, but the principle on a whole is to make sure there is a level playing field.

"Further details will be announced later," he said.

However, Johan said that not every foreign online services companies would be taxed.

He added that the newly introduced tax would have a threshold to ensure smaller companies were exempted.

Finance Minister Lim Guan Eng, in tabling Budget 2019 last Friday (Nov 2), announced that all imported services, including online ones like software, music, videos and digital advertising, would be levied with a service tax starting Jan 1, 2020.