KUALA LUMPUR: The government is planning to impose a digital service tax of six per cent on foreign digital service providers from Jan 1, 2020, said Deputy Finance Minister Datuk Amiruddin Hamzah.
He said the rate is deemed the lowest compared to what is imposed in several other countries.
Russia introduced the tax on Jan 1, 2017, at a rate of 18 per cent; Norway, on July 1, 2011, at a rate of 25 per cent; and New Zealand on Oct 1, 2016, at a rate of 15 per cent, he said.
“(Digital service providers) should have no problem paying... because it’s only six per cent. If they can comply with Russia, Norway and New Zealand, I don’t see any reason why they should refuse to comply with the rate in Malaysia,” Amiruddin added.
He said this when winding up a debate on the Service Tax (Amendment) Bill 2019 at the Dewan Rakyat here, on Monday.
“It’s not fair if only local digital service providers have to pay the tax. This is not a new tax, it’s just having the scope extended to providers in other countries,” he said.
Amiruddin added that the government has the power to enforce the law even on foreign digital service providers as there is a government-to-government (GTG) cooperation among countries involved in the Organisation for Economic Cooperation and Development (OECD).
“This cooperation enables us to take legal action against foreign companies which refuse to pay the service tax,” he said.
The Bill was later passed with amendments.
Other Bills passed by the Dewan Rakyat yesterday were the Customs (Amendment) Bill 2019, the Free Zones (Amendment) Bill 2019, the Sales Tax (Amendment) Bill 2019 and the Excise (Amendment) Bill 2019.
The sitting continues today.