Introduction to Withholding Tax and Imported Services Tax - Implications of Digital Services (PART 3)
Key Takeaway
- Withholding Tax on Foreign Service Providers
- Service Tax on Digital Services
Part 3 of this article will focus on digital service tax and service tax
issues on imported services for e-Commerce transactions, under the
Service Tax Act 2018.
What is Imported Service?
“Imported taxable service” means any taxable service acquired by
any person in Malaysia from any person who is outside Malaysia
(Section 2 of Service Tax Act 2018)
What is Digital Service?
“Digital service” means any service that is delivered or subscribed
over the internet or other electronic network and which cannot be
obtained without the use of information technology and where the
delivery of the service is essentially automated;”.
With effect from 1 January 2019, regardless if you are
either a Service Tax-registered person or Non-Service
Tax-registered person, you are required to file a return
and pay the service tax in respect of all taxable services
that you procure from overseas suppliers, if such taxable
services fall under Group G and I of Service Tax
Regulations 2018.
Types of Digital Service
- Software, Application & Video Games
- Music, e-book and film
- Advertisement and online platform
- Search engines and social networks
- Database and hosting
- Internet Based Telecommunication
- Online Training
- Others (such as subscriptions to online newpapers and journals etc.)
