DECEMBER 2019: MALAYSIA TAX UPDATES

Google will be charging a 6% digital tax starting in 2020

Google Malaysia will charge a 6% digital tax on its services starting in year 2020, in tandem with the Malaysian government's policy on imposing digital taxes.

The government had earlier this year, in April, fixed a 6% digital service tax rate, with a threshold set at RM500,000, following the passing of the Service Tax (Amendment) Bill 2019 by the Dewan Rakyat.

Digital service is defined as any service delivered or subscribed over the Internet and other electronic networks, which cannot be obtained without the use of information technology and the delivery of the service is essentially automated.

This digital tax will also be applicable to digital media advertisement such as Facebook. Amazon Web Services(AWS) will also be charging a service tax rate of 6% to its customers with effect from 01 January 2020.

Source: Media Release

Malaysia has raised its export tax for crude palm oil for the first time in over a year

Malaysia has raised its export tax for crude palm oil from zero to 5% for January 2020.

The world's second-largest producer and exporter of palm oil had last imposed an export tax of 4.5% in August 2018 before lowering it to zero. It then placed a tax-free exemption on crude palm oil from May to December 2019 in a move to boost palm oil exports and expand into new markets.

Source: Media Release

Pangkor ready for its duty-free status

The island, Pulau Pangkor is ready to be duty-free from January 01, 2020. However, the government has stated that alcohol will not be listed as a tax-free item on the island.

Perak is expecting a 3-5% hike in the number of tourists travelling to the state next year. For the past three consecutive years, Perak had recorded 7.6 million domestic tourists.

Source: Media Release

Increase in tax relief for insurance and EPF in 2019 assessment

The Inland Revenue Board of Malaysia (IRB) has increased its assessment year 2019 resident individual tax relief for life insurance and Employees Provident Fund(EPF) contribution to RM7,000 from RM6,000 in 2018.

The tax relief would be separated to RM4,000 for EPF and RM3,000 for life insurance for the assessment year 2019. Local and foreign tax residents who previously claimed the full RM6,000 life insurance relief but do not contribute to EPF would pay up to RM840 more income tax next year if they fall under the top 28% tax bracket.

EPF contributors with at least RM60,000 annual income (RM5,000 a month) and whose life insurance premium is more than RM3,000 a annum (>RM250 a month), would see a RM1,000 net increase in relief combined. This works out to RM80 to RM280 tax savings, depending on whether you are in the 8% or 28% tax bracket.

Click here for more details on Tax Relief For Resident Individual - Year of Assessment 2019

Source: Media Release