Do Foreign Digital Service Providers Charge Service Tax in Malaysia?

The Royal Malaysian Customs Department runs a dedicated system, MyServiceTax on digital services, for foreign providers.

Who. A foreign service provider that supplies digital services to consumers in Malaysia. A digital service is one delivered or subscribed to over the internet or another electronic network, requires information technology, and is largely automated.

Threshold. Registration is required when the value of digital services over a period of twelve months or less exceeds RM500,000 (section 56B).

Filing. The taxable period is three months, and returns are made quarterly. Tax is due when payment is received, unless Customs approves accounting on an invoice basis.

Who is a consumer. The portal defines a consumer by two of three criteria: payment method, IP address or mobile country code, and residence.

Rate. The rate is set by the Service Tax (Rate of Tax) Order, not on the portal page; confirm the current figure with Customs before pricing. (Rate: needs research.)

For a Malaysian seller. The scheme applies to foreign providers. A Malaysian business that sells services follows the ordinary service tax rules and thresholds for its service group.