Monitoring Malaysia’s sales and services tax (SST) extension to foreign-supplied digital services

Taxamo is monitoring developments in Malaysia ahead of the potential extension of its Sales and Services Tax (SST) to digital supplies from non-resident businesses. Malaysia is the second country in SE Asia to introduce a digital tax, after Singapore, but may be the first to implement such rules.

Dec 21, 2018

Taxamo is monitoring developments in Malaysia ahead of the potential extension of its Sales and Services Tax (SST) to digital supplies from non-resident businesses.

It is expected that the specific rules may be gazetted in Malaysia before January 1, 2019. Taxamo will support this extension of Malaysian SST to these digital supplies by non-resident businesses.

At the time of publishing it is still unclear if non-resident digital suppliers will have obligations from January 1, 2019, or from January 1, 2020. Sections 47 and 48 of the 2019 Malaysia budget speech in November made specific reference to the extension of SST to B2B and B2C digital supplies with introduction dates stated as January 1, 2019 (for certain B2B supplies) and January 1, 2020 (for certain B2C supplies).

While it is unlikely that B2C will be included for January 1, 2019, this is still possible, and until we get official confirmation of this then one should continue to monitor and prepare as appropriate.

Here at Taxamo we will, of course, keep you updated on developments in Malaysia.

Malaysia and Singapore make digital tax moves

Malaysia is the second Southeast Asian state to plan such as extension its tax rules to such digital supplies but may be the first to implement it.

This extension of the SST will be applicable in the areas of software, music, videos and digital advertising, and is similar to Singapore's Goods and Services Tax (GST) that is also to be extended on January 1, 2020. More on Singapore's plans here.

In Malaysia, the intention of the SST extension is to level the playing field for local service providers in the area of digital technology to fairly compete with foreign firms.

READ MORE: More context on Malaysia's digital taxation plans (and background) here. 

Taxamo content is created for guidance only, please consult your local tax advisor.

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