Alphabet Inc.'s Google LLC will start charging customers in Malaysia a 6% service tax from January 2020 as the country implements a digital services tax.
"We always comply with the tax laws in every country we operate in, and we continue doing so as tax laws evolve," a Google spokesperson reportedly said in a statement to the Nikkei Asian Review.
Effective Jan 1, 2020, the Malaysian government will impose a 6% service tax on any digital service provided by a foreign-registered person. Under the country's amended service tax legislation, foreign companies providing digital services in Malaysia should register with the government to become a foreign-registered person.
Registration for foreign companies is mandatory when the total value of digital services provided to a consumer in Malaysia exceeds 500,000 ringgit annually.
According to the Malaysian customs department, digital services are defined as services that are to be delivered via IT with minimal or no human intervention from service providers. These include software, apps, video games, music, e-books, film, advertisement and online platforms, search engines, social networks, database, internet-based telecommunications and online training.
The legislation is designed to boost tax revenue and level the playing field for domestic players, the Nikkei report noted.
In other parts of the world, Canada, Austria, Indonesia and the U.K. have pledged to push through with their respective digital tax implementations despite a threat of retaliation from Washington. The U.S. earlier proposed tariffs on US$2.4 billion of French products in response to France's digital tax.
As of Dec. 6, US$1 was equivalent to 4.16 Malaysian ringgit.