M'sian Govt Officially Sets Tax On Netflix, Spotify, And Other Digital Services At 6%

The tax rate was made official by the Parliament earlier today.

Cover image via Bustle

Foreign companies operating digital services like Netflix and Spotify will soon have to pay a 6% tax to the Malaysian government after the passage of the Service Tax (Amendment) Bill 2019 today

Image via Alt923

Malay Mail reported that the Parliament passed the amendment at Dewan Rakyat earlier today, 8 April, which will allow the government to impose a service tax on digital services provided by foreign companies.

The 6% tax, which will come into force from 1 January 2020 onwards, applies to any and all digital services provided by foreign companies regardless of whether they are for individual or business use

"Examples of digital services include online music and online subscriptions, e-book subscriptions, e-marketplace platform usage, cloud computing-based subscription, and online computer software purchases," said Deputy Finance Minister Datuk Amiruddin Hamzah, as quoted by Astro Awani

"Malaysian users are determined based on the payment method, the Internet Protocol (IP) address or the mobile number used during the purchase or subscription of digital services, and whether the user lives in Malaysia," he explained. 

The digital tax was announced in the tabling of Budget 2019 last year, although the tax rate was not revealed at the time

Image via RTM

According to Finance Minister Lim Guan Eng, the service tax will be imposed on "online services imported by users" such as Netflix, Spotify, Steam, as well as other software, music, videos, or any digital advertising.

Foreign service providers will also be required to register with Malaysia Customs. 

While it is still unclear if the tax will affect Malaysian users, here's to hoping streaming services like Netflix do not censor content that we're paying for:

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