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Service Tax on Foreign Digital Services

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Are you ready for Service Tax on Digital Services?

The Royal Malaysian Customs Department has announced the implementation of the Service Tax on Foreign Digital Services from 1st January 2020 via the Service Tax (Amendment) Act 2019 (“STAA 2019”).

With the implementation of this law, 6% service tax is required to be charged
by any Foreign Service Provider on digital services with effect from 1st January 2020.

What kind of Service considered as Digital Service?

Digital services means services that is to be delivered through information technology medium with minimal or no human intervention from service provider. These services include the supplies of the following (the list is not exhaustive):

(i) Software, application & video games
(e.g. online licensing of software, updates and ad-ons website filters, firewalls, provision of mobile applications);

(ii) Music, e-book and film
(e.g. provision of music, live streaming services, include subscription-based media / membership)

(iii) Advertisement and online platform
(e.g. offering online advertising space on intangible media platform, offering platform to trade products or services)

(iv) Search engines and social networks
(e.g. customised search-engine services)

(v) Database and hosting
(e.g. website hosting, online data warehousing, file-sharing and cloud storage services)

(vi) Internet Based Telecommunication
(e.g. Cloud-PABX, VOIP Phone,)

(vii) Online training
(e.g. Provision of distance teaching, e-learning, online courses, webinar)

(viii) Others
(e.g. Subscription to online newspapers and journals, provision of other digital content like images, text, information and payment processing services)

Ref : Guide on Digital Services as at 20 August 2019.

https://mysst.customs.gov.my/assets/document/Industry%20Guides/GI/Guide%20on%20Digital%20Service.pdf

If you have any Autodesk / Adobe / Microsoft subscription expiring in January 2020, we encourage you to renew them earlier. You may save more by renewing them now. Please feel free to contact us by fill in the form below for discussion.

 

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