National news agency Bernama confirmed the date for the implementation of the Digital Tax as announced during 2019 Budget in October.  According to a Twitter post, the agency published January 1 2020 as the chosen date by the Ministry of Finance.

Digital tax has been on the agenda of the new government since taking over and implementing will be a big push towards equal taxation on corporate companies in Malaysia. Firms like Alibaba, Google, Facebook, Netflix and Spotify have been enjoying tax free profits in hundreds of millions with minimal head count. Digital economy allows companies from far reaches to do business on virtually anywhere in the planet, set up their business headquarters in the country with the lowest tax policy and reap in billions. While the loop hole in the system gives advantage to this clever global operation, whats painful is the disruption they cause local companies who pay decent tax and employ local people. A double whammy to the government!

Initiating the digital tax is laudable but implementation will be a problem, most of this company’s do not declare their revenues from the country they operate, on how the Ministry will engage with them to share the data will be interesting to watch. Lim Guan Eng is in the right direction but the social giants are not going to give in so easily. Europe has been pushing for digital tax for years and has yet to be able to implement due to the complex nature of the business that have cleverly circumvented the law and the archaic tax system in place.

Even if Lim and his team are able to negotiate terms with these giants the bigger concern will be whether the 6% will passed on the consumer? This is a burden no Malaysian will want to bear at this moment.