MALAYSIA Law and Practice Contributed by: Janet Toh, Irene Yong, Krystle Lui and Boo Cheng Xuan, Shearn Delamore & Co.
ures, and ensuring adequate training for person - nel to meet the new legal standards. The advent of digital economy also brings about concerns on online safety, which is sought to be addressed by the Online Safety Bill 2024 (OSB). The OSB seeks to enhance and promote online safety and regulate harmful content by provid - ing for duties and obligations of the applications service providers (ASPs), content applications service providers (CASPs) and network service providers, while strengthening regulatory over - sight in the digital space. Upon receiving Royal Assent and being gazetted, the OSB will take effect on a date specified by the Minister of Communications. 1.2 Digital Economy Taxation Service Tax For purposes of the Service Tax Act 2018 (STA), “digital service” refers to “any service that is delivered or subscribed over the internet or other electronic network and which cannot be obtained without the use of information tech - nology and where the delivery of the service is essentially automated”. “Digital service” is prescribed as a taxable ser - vice, meaning that 8% service tax is chargeable under the STA upon any digital service provided in Malaysia by a registered person in carrying on their business. “Digital service” also includes the provision of an electronic medium that allows suppliers to provide supplies to customers or transactions for provision of digital services on behalf of any person. The service provider will be required to be regis - tered under the STA and charge service tax if the total value of its taxable services in a particular
month and the 11 months immediately preced - ing that month has exceeded MYR500,000 or, where there are reasonable grounds for believing that the total value of all its taxable services in that month and the 11 months immediately suc - ceeding that month will exceed MYR500,000, whichever is earlier. Imported digital services are also subject to the 8% service tax on digital services acquired by any person in Malaysia from any person who is outside Malaysia in B2B transactions. The recipi - ent of the imported services must account for and pay the service tax to the Royal Malaysian Customs Department (“Customs”). The 8% service tax is also applicable where a foreign service provider provides any digital service to consumers. “Consumer” means any person who fulfils any two of the following: • makes payment for digital services using credit or debit facility provided by any finan - cial institution or company in Malaysia; • acquires digital services using an internet protocol address registered in Malaysia or an international mobile phone country code assigned to Malaysia; or • resides in Malaysia. Such foreign service providers will be required to register under the STA within the stipulated period if the total value of all its digital services to consumers in a particular month and the 11 months immediately preceding that month has exceeded MYR500,000 or where there are rea - sonable grounds to believe that the total value of all its digital services in the next 12 months will exceed MYR500,000, whichever is earlier. They will also have to file the relevant service tax returns and account for the service tax to Customs, among other reporting obligations.
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