Malaysiakini News

Gov't studying tax on foreign digital service providers

Bernama  |  Published:  |  Modified:

The government is currently studying the tax structure for foreign digital service content providers, says Deputy Finance Minister Amiruddin Hamzah.

He said the ministry would look into the findings of the World Bank Group report Malaysia's Digital Economy: A New Driver of Development report first before coming out with any mechanism for the digital economy.

“We are definitely looking into the matter, but I am not sure whether we could make it for the 2019 Budget presentation set for Nov 2.

“But it is among the areas that we are concentrating on, because if we put it aside, the nation will be losing revenue,” he told reporters on the sidelines of the Public Policy in a Digital World Conference in Kuala Lumpur today.

The two-day conference is organised by the Finance Ministry and World Bank Group’s Global Knowledge and Research Hub.

On the targeted digital economy revenue contribution to the national GDP, Amiruddin reiterated that the ministry would look into the report thoroughly before setting a reasonable target for the GDP.

Meanwhile, World Bank Group macroeconomics, trade and investment lead economist Richard Record said the modality of taxation was more crucial than the level of the taxation, as it would reflect rapid changes of economic activities, which took place via digital channels and involved different entities.

“However, the government needs to find a balance between imposing policy and the players. 

“Per se, we think with the right regulatory policy in terms of implementation of the competition framework and encouraging the entrance is very possible for the cost of broadband internet to come down, and that will helpfully alleviate the adoption by SMEs,” he said.

On the recommended tax rate to be imposed on the digital economy, he said Malaysian policymakers were encouraged to look into the strategy of other countries, which were going through the same phase and perhaps could come out with something similar to them.

“Australia imposed the tax on July 1 and another example to look at is the European Union,” he said.

- Bernama

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