“We always comply with the tax laws in every country we operate in, and we continue doing so as tax laws evolve. To be in compliance with Malaysia’s new Sales & Services Tax, we will charge a 6 percent Services Tax to our clients in the country, starting from January 1, 2020, once the law comes into effect,” a Google spokesperson said in a statement to The Star.
Currently, Google Malaysia has confirmed that the 6 percent tax will be applicable to their G Suite services. The tax will be charged on user purchases and reflected under Billing & Payments.
For other Google related services such as YouTube Premium, YouTube Music, and online purchases for digital items through Google Play, the spokesperson said that announcements would be made soon. They also noted that users and customers will be notified via email about any possible pricing changes via email.
The tax is also expected to affect other online services such as streaming services like Netflix and Spotify, as well as digital video game distribution companies such as Steam. Foreign companies providing such services have been allowed to register with the Customs Department from Oct 1. Said registration for foreign service providers is mandatory when the total value of digital services provided to Malaysian consumers exceeds RM500,000 (about US$120,000) per year.
According to the Royal Malaysian Customs Department‘s Service Tax Industry Guides, digital services is defined as “services that is to be delivered through information technology medium with minimal or no human intervention from service provider”.
By this definition, software, applications, video games, music, film streaming services, subscription-based media, cloud storage services, advertising, etc, would all fall under digital services and thus will have to comply with the implementation of the new tax.