Malaysia Ponders Tax For Online Businesses

Malaysia Ponders Tax For Online Businesses

May 17, 2016 – The Malaysian government has said it is looking into implementing a new tax for the online business sector that has seen a rapid growth in recent years.

Speaking on the sidelines of a public finance management forum in Kuala Lumpur earlier today, Secretary-General of the Ministry of Finance Mohd Irwan Serigar revealed that the Inland Revenue Board has been tasked to conduct a thorough evaluation on rolling out the new tax as early as next year.

Referring to those who are in the online business sector, Mr Irwan said: “These people are earning more and more and the income is taxable income. That’s why we are asking inland revenue to do a thorough evaluation to go into taxing them.

“Otherwise, it will be a revenue loss for us because going forward, more businesses will go into sharing and digital economy so we in the tax collecting department need to be vigilant and go into this area as the economy transforms,” added Mr Irwan.

Under the proposal, online businesses also need to be registered with the Registrar of Companies so that their income can be tracked by the government to prevent revenue loss.

The proposed tax would also affect Uber drivers as they will be taxed on their income.

Mr Irwan highlighted a recent study by the Public Land Transport Authority, that Uber drivers could easily make about RM7,000 (US$1,750) a month.

“Part-timers are already earning RM7,000 – imagine if they are full-time? RM3,000 to RM4,000 a month is already taxable income, that’s why there is revenue loss,” added Mr Irwan.

Mr Mohd Iskandar, a part-time Grab car driver who earns around RM4,000 a month, said he agrees that those like him should get taxed, but with one condition.

“The government has to recognise Grab or Uber drivers as a business in order to tax us,” he said. “Right now, they are undecided on whether or not we’re a legitimate business.”

“At least the income document can be used as a valid one for banking purposes. Right now, we can’t get a loan, not even a car loan,” he added.

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