FEBRUARY 17 — Winston Churchill said that “there is no such thing as a good tax”, and our consumers may share this sentiment when service tax on digital services kicked in on 1 January 2020. Essentially, consumers in Malaysia now would suffer tax on the acquisition / subscription of digital services / products. So, what kind of items will be subject to digital tax?
Therefore, consumers who acquire or subscribe to these services would find themselves having to bear an additional 6% service tax imposed by their suppliers who are required to register with the Royal Malaysian Customs Department. However, not all suppliers are required to register. Those with annual sales of RM 500,000 or more would have to but many suppliers with less sales would not. The question is whether the latter suppliers would cash –in by raising their prices.
For instance, the purchase of computer via online platforms would not be subject to digital tax on the premise that computer is not a digital product / service. However, this does not mean that the purchases we make online on tangible goods are tax free as most goods would be subject to sales tax, including imported goods.
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