From 1 January 2019, the Malaysian tax authorities confirmed that it will amend its current Sales and Service Tax (SST) legislation in order to apply SST to online services supplied by non-resident (foreign) companies.
At present, foreign businesses providing digital services in Malaysia do not have to charge VAT on their sales. However, in an effort to remove the unfair advantage this gives to non-resident companies over Malaysian resident providers, the Malaysian government are proposing that SST at 6% will be applied on these types of transactions made to both businesses and to consumers.
This new obligation will be subject to an RM 500,000 registration threshold (approx. € 100,000) and will apply to a range of electronic services including streaming games, music, apps, films, e-books, e-journals and internet services.
Tax Committee clarified that VAT invoices registered as of 1 July 2017 are the only document that can support a claim for VAT refund.
Nonetheless, the State Fiscal Service (SFS) clarified that additional documents must also be submitted in order to be entitled to a deduction of the input VAT.
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