Budget 2020: Subscribers unsure about Digital Service Tax

  • TECH
  • Friday, 11 Oct 2019

So far, Netflix and Spotify have yet to announce if they will absorb the tax. — AP

The Digital Service Tax, which was announced last year and will come into effect Jan 1, 2020, was met with mixed reactions.

The tax is expected to affect streaming services like Netflix and Spotify, digital advertising services offered by corporations like Google, and also digital game distribution companies such as Steam.

Foreign companies providing such services have been allowed to register with the Customs Department from Oct 1.

Though it’s unclear whether the cost will be passed to the user, but some are already bracing for it.

Entrepreneur Eric Wong said he is upset at the thought of having to pay more to continue using services that he is already accustomed to such as Netflix, Spotify and iCloud.

"On top of my monthly my Internet bill, I may have to pay more to use digital services. I may switch to local service providers which are cheaper but only if the amount of content offered can match the ones available on services like Netflix or Amazon Prime," he said.

Event planner Ivan Lim said the 6% tax "won't make a huge difference" to his current monthly expenditure on foreign digital services.

"I guess it will be about an additional RM0.89 to RMRM2.50 for some services. I think it's still affordable. Plus there are plans that you can share with multiple others to ease the additional burden," he explained.

Another entrepreneur Adam W. felt that the tax was "inevitable".

"I think Malaysia is already far behind other countries which have already implemented it. You're already paying taxes to use other services anyway," he said.

For an industry player like dimsum, its chief marketing officer Lam Swee Kim said the digital tax on foreign service providers is a welcome move.

"It levels the playing field between foreign and local service providers which are already paying service tax to the government," she said.

She believes foreign service providers are open to the announcement based on a series of previous industry discussions.

"Some of them do understand that if they want to continue doing business here and provide their services to Malaysians, then they have to follow the local rules and regulations," Lam said.

So far, Netflix and Spotify have yet to announce if they will absorb the tax, which is set at 6%, or let users bear the cost by increasing the price of existing plans.

iflix and Google have declined to comment.
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