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Govt Eyes Providers That Generate Billions Of Ringgit In Revenue

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KUALA LUMPUR: While the Government is studying the possibility of imposing a tax on digital business platforms, there is no intention to disrupt small businesses that operate online, according to Second Finance Minister Datuk Johari Abdul Ghani.

Digital business platforms generate billions of ringgit in revenue, but do not pay taxes as there is no specified tax structure for them.

“We should not hinder small online businesses by imposing any tax, at this moment.

“When you start taxing small businesses, you make it difficult for them to grow,” Johari said after opening the National Tax Conference 2016 (NTC 2016) here.

Instead, the Government is looking at the platform providers who generate billions of ringgit in revenue at the expense of companies that operate without a digital platform.

Johari added that the Government wanted to create a level playing field for businesses operating in the country.

“We are not trying to discourage them. We are trying to create a level playing field for all who do businesses in Malaysia and provide employment for the people,” said Johari.

In his keynote address at the NTC 2016, Johari said that the Government had formed a team to study the development of taxing on the digital economy.

Apart from that, Inland Revenue Board (IRB) CEO Tan Sri Mohd Shukor Mahfar said that the board was monitoring the development of the digital economy.

The digital economy is expected to contribute some 20% to gross domestic product by 2020. Going forward, digital cash, virtual currency or electronic currency operating independently of any central bank is also expected to gain popularity.

“We are currently studying these business activities to bring them under the tax net.

“However, this would first require the appropriate infrastructure to be put into place both in terms of technology, organisational capability and the relevant legal framework to facilitate our efforts,” said Mohd Shukor.

As for goods and services tax (GST), Johari said that there would be no increase in the current 6%. “You can be rest assured that as far as 2017 is concerned, there will be no increase in GST,” said Johari.

NTC 2016 is co-hosted by IRB and the Chartered Tax Institute of Malaysia.

The two-day conference was a platform for tax practitioners, accountants, auditors, and academicians, to discuss taxation and economic issues.

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