SINGAPORE: The government will keep tabs on the proposed tax enforcement on imported digital services that is expected to be implemented by Singapore in 2020, said Second Finance Minister Datuk Seri Johari Abdul Ghani.
He said while Malaysia is making progress in efforts to introduce the Goods and Services Tax (GST) on imported digital services, the implementation will not be rushed.
“We are monitoring Singapore and will look at how they are going to implement it. We will learn the advantages and disadvantages of the tax system on digital businesses from there,” he told reporters after opening the National GST Conference 2018 in Kuala Lumpur yesterday.
Johari said apart from Singapore, the government is also looking at various tax mechanisms imposed on digital businesses in other countries including Japan, Norway, Australia and the European Union.
Johari acknowledged the government’s desire to impose GST on imported digital services in the near future, with the Royal Malaysian Customs Department currently working on the statutory amendments to enable the enforcement.
“While B2B services are already captured in the current regime by way of reverse charge mechanism, business- to-customer services, which may include video and music streaming, apps and software, do not fall within the ambit of the current law.
“The Customs is currently working on the statutory amendments to give effect to the changes,” he said, adding that the approach is in line with the current global practices.
Johari said currently the GST is only applicable to businesses that are established or based within the country, which is not conducive moving forward.
“Digital service providers that are operating outside of Malaysia are not subjected to the same tax obligation.
“Clearly, such practice is not conducive for businesses that are based in our jurisdiction, as they are competing not on a level playing field with businesses that are based elsewhere, but providing services to Malaysians.”
Meanwhile, Johari said the introduction of the GST in April 2015 has resulted in Malaysia’s economy becoming more resilient to shocks.
He said despite concerns and scepticism during the early days of its implementation, the GST was implemented at the right time especially in view of the government’s efforts to transform and diversify Malaysia’s economy.