Facebook and Google Malaysia have announced that a 6% Digital Tax will take effect on its service starting next year (01/01/2020).

1. Effective 1st January 2020, service tax shall be charged and levied on any digital service provided by a foreign registered person (FRP) to any consumer in Malaysia.
   
   
2. The threshold is RM500,000.00 and rate is 6%. The registered person need to file a quarterly return.
   
   
3. Digital Service is any service that is delivered or subscribed over the internet or other electronic network which cannot be obtained without the use of information technology and where the delivery of the service is essentially automated.
   
   
4. What Kind of Services Considered as Digital Service?
   
   

• Software, application & video games (e.g. online licensing of software, updates and ad-ons website filters, firewalls, provision of mobile applications)
• Music, e-book and film (e.g. provision of music, live streaming services, include subscription-based media / membership)
• Advertisement and online platform (e.g. offering online advertising space on intangible media platform, offering platform to trade products or services)
• Search engines and social networks (e.g. customised search-engine services)
• Database and hosting (e.g. website hosting, online data warehousing, file-sharing and cloud storage services)
• Internet Based Telecommunication (e.g. Cloud-PABX, VOIP Phone)
• Online training (e.g. Provision of distance teaching, e-learning, online courses, webinar)
• Others (e.g. Subscription to online newspapers and journals, provision of other digital content like images, text, information and payment processing services)

** The provision of the above is not considered as digital services if: The services can be obtained without the use of IT

5. Digital Service Tax is a tax charged on:
   
   

• Any digital service
• Provided by Foreign Service Provider
• To any consumer
  
  

6. Foreign Service Provider is a person either business or individual outside Malaysia who provides digital services to consumer. FSP including person
   
   

• Who sell digital products directly or
• Who sell digital products indirectly through intermediaries such as online platform
  
  

7. Online platform who makes transactions on behalf of the oversea service provider and issues invoice or any other document under their name, will be regarded as FSP
   
   For example: Amazing.com who provide online platform to trade services or goods. Customer will purchases game from COC through Amazing.com. Amazing.com will issue invoice to customer. Under this scenario, Amazing.com is considered as FSP and Amazing.com will account service tax on digital services.
   
   
8. Consumer in Malaysia is any person who fulfils any two of the following:
   
   
   • Makes payment for digital services using credit or debit facility provided by any financial institution or company in Malaysia
   • Acquires digital services using an internet protocol address registered in Malaysia or an international mobile phone country code assigned to Malaysia
   • Resides in Malaysia
     
     
9. Where any payment is received before the effective date in connection with the provision of digital services that will be provided on or after the effective date, NO service tax on digital services shall be charged on the payment received