Govt mulling tax on digital business platforms

The government is studying the possibility of imposing a tax on digital business platforms in order to create a level playing field between online and non-online businesses, Second Finance Minister Datuk Johari Abdul Ghani said.

He said companies providing digital business platforms generate billions of ringgit in revenue but do not pay tax due to the absence of a tax structure for this kind of business.

"We are not trying to discourage them but we are trying to create a level playing field for all those people that are doing business in Malaysia, and create employment for the people," he told reporters after opening the National Tax Conference 2016 here today.

However, he said, imposing such a tax might hinder the growth of these mostly small businesses.

"If you tax them, you are making them difficult to grow. I think you should not disturb the small businesses who want to do online business," he added.

Earlier in his speech, Johari said the government has formed a team to study the development of taxation in the digital and sharing economy.

"Our priority would be to ensure a level playing field for Malaysian-based businesses that might be disadvantaged by foreign digital companies selling directly to consumers and supplying digital services and online products but are not paying their share of tax," he said.

Meanwhile, Inland Revenue Board of Malaysia Chief Executive Officer/Director General Tan Sri Dr Mohd Shukor Mahfar said the board is closely monitoring the development of the digital economy which is expected to contribute 20 per cent to the country's Gross Domestic Product (GDP) by 2020.

He said the digital economy has already seen the emergence of setups such as online transportation network service Uber, online video streaming service Netflix, online trading marketplace Alibaba, and online vacation home renting service Airbnb.

Moving ahead, he said digital cash, virtual currency, electronic currency or crypto currency operating independently of any central bank is 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," he said.

Themed "Broadening Perspectives, Enhancing Our Tax Base", the two-day conference beginning today gathered more than 2,000 participants consisting of professionals mainly tax practitioners, accountants, auditors, corporate figures and academics to discuss and further enhance understanding on current taxation and economic issues.