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Service Tax on Digital Services

With the fast paced and global development of the digital environment, it is indeed a challenging time for businesses to keep themselves abreast with the latest technology, let alone the continuous and ever-changing tax landscape. The introduction of Service Tax on digital services in Malaysia that is expected to go-live on 1 January 2020, could not be done in a more timely manner, as other countries in the world are also moving towards the same direction.  

In respect of the above, KPMG participated in a discussion with the Royal Malaysian Customs Department (“RMCD”) on 14 May 2019, organized by the American Malaysian Chambers of Commerce (“AMCHAM”) for its members – with the objective of obtaining clarity from RMCD pertaining to certain aspects/ mechanism of the Service Tax on digital services.

Amongst others that were discussed, RMCD provided certain insights on the following areas:-

§  RMCD acknowledges that the coverage extends to Business-to-Business (“B2B”) transactions with the existing definitions in the Service Tax (Amendment) Bill 2019, despite the existing requirement for businesses to account for service tax via imported taxable service.

§  Exemption for service tax would be available to avoid double taxation on the same digital service.

§  Whilst a positive/ inclusion list of types of digital services may be made available in time to come, RMCD/ Ministry of Finance (“MoF”) is also considering the possibility whether there should be any exclusions to it.

§  It has yet to be determined whether the applicability of intra-group relief will be extended to digital services.

§  RMCD is working closely with MoF with regard to the issuance of guidelines for this and will release them to the public once it is available.

In the coming months, it will be an important period for the affected businesses to analyse and ascertain the extensiveness/ applicability of Service Tax on digital services on their business models and where necessary, undertake pro-active measures to ensure compliance to the requirements of the law. In KPMG, we strive to seek facts and provide insights to our business partners and we will continuously provide the relevant updates from time to time, in view of the uncertainty surrounding the matter.  

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Contact KPMG

For more information on our core service offerings, please contact:

Petaling Jaya Office

Tai Lai Kok
Executive Director –
Head of Tax and Head of Corporate Tax
ltai1@kpmg.com.my
+ 603 7721 7020

Long Yen Ping
Executive Director –
Head of Global Mobility Services yenpinglong@kpmg.com.my
+ 603 7721 7018

Bob Kee
Executive Director –
Head of Transfer Pricing
bkee@kpmg.com.my
+ 603 7721 7029

Ng Sue Lynn
Executive Director –
Head of Indirect Tax
suelynnng@kpmg.com.my
+ 603 7721 7271

Soh Lian Seng
Executive Director –
Head of Tax Risk Management
lsoh@kpmg.com.my
+ 603 7721 7019

Nicholas Crist
Executive Director –
Corporate Tax
nicholascrist@kpmg.com.my
+ 603 7721 7022

Dato’ Leanne Koh
Executive Director – 
Corporate Tax
leannekoh@kpmg.com.my
+ 603 7721 7026

Neoh Beng Guan
Executive Director – 
Corporate Tax
bneoh@kpmg.com.my
+ 603 7721 7025

Ong Guan Heng
Executive Director – 
Corporate Tax
guanhengong@kpmg.com.my
+ 603 7721 7027

Chang Mei Seen
Executive Director – 
Transfer Pricing
meiseenchang@kpmg.com.my
+ 603 7721 7028

Ivan Goh
Executive Director – 
Transfer Pricing
ivangoh@kpmg.com.my
+ 603 7721 7012

 

 

 

Evelyn Lee 
Executive Director –
Penang Tax
evewflee@kpmg.com.my
+604 238 2288 (ext. 312)

Regina Lau
Executive Director –
Kuching & Miri Tax
reglau@kpmg.com.my
+6082 268 308 (ext. 2188)

Titus Tseu
Executive Director –
Kota Kinabalu Tax
titustseu@kpmg.com.my
+6088 363 020 (ext. 2822)

Ng Fie Lih
Executive Director –
Johor Bahru Tax
flng@kpmg.com.my
+607 266 2213 (ext. 2514)

Crystal Chuah Yoke Chin
Tax Manager –
Ipoh Tax
ycchuah@kpmg.com.my
+605 253 1188 (ext. 320)