Tax highlights from your advisers Guide on Digital …Head of Tax Dispute Resolution [email protected] +603 7721 7019 Bob Kee Executive Director – Head of Transfer Pricing [email protected]

© 2020 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Tax WhizTax highlights from your advisers

KPMG in Malaysia

30 July 2020

Guide on Digital Services by Foreign Service Provider Updated Guide as at 1 August 2020


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Tax Whiz 2020 | Guide on Digital Services by Foreign Service Provider as at 1 August 2020

Guide on Digital Services by Foreign Service Provider

Set out below are some of the notable updates. For further details, please click here for a copy of the Updated Guide at MySST website.

This Guide is for digital services provided by a FSP. For digital services provided by a Malaysian service provider, it will be covered separately in the Guide on Information Technology Services [yet to be made available].

Further ‘definition’ of digital services, which includes, “the service:

i. That is to be delivered through information technology medium or other electronic network;

ii. Cannot be delivered without the use of internet technology;

iii. That to be delivered to consumer is essentially automated. The term essentially automated may refer to the nature of the service when it is to be delivered as with minimal or no human intervention from service provider. For example, when the digital service is to be provided to consumer, service provider does not have to interfere or carrying or perform any activities, but the consumer will be able to acquire or download the digital services themselves.”

The Royal Malaysian Customs Department (“Customs”) has issued an updated Guide on Digital Services by Foreign Service Provider (“FSP”) as at 1 August 2020 (“Updated Guide”). The Updated Guide replaced the earlier version dated 20 August 2019.

https://mysst.customs.gov.my/IndustryGuides


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Clarification and additional examples on persons considered as FSP, including online platform operators.

An online platform operator is considered as a FSP if any of the following conditions are met:

a) The online platform operator authorizes/ sets the term and conditions of the underlying transactions

b) The online platform operator has a direct or indirect involvement in the payment processing

c) The online platform operator has a direct or indirect involvement in the delivery of the digital service

d) The online platform operator provides customer support service in relation to the provision of digital services

e) The invoice or any other document provided to the consumer identifies the supply as made by the online platform operator

The value of digital services sold indirectly through online platform operator will be taken into account as the total value of digital services made by the online platform operator, not the FSP.

One of the tests that the foreign registered person may consider to determine “consumer in Malaysia” is the recipient’s country selection upon registration/ purchase is in Malaysia. Where the digital services is provided periodically and charges are imposed on a periodic basis, the foreign registered person shall use the information provided by the consumer during subscription or registration unless the consumer updates the status.

The intra-group relief facility for digital services provided within the same group of companies, which was effective 14 May 2020, is reiterated.

Service Tax is due at the time when payment is received from consumers, unless special approval has been obtained from the Director General of Customs to account on invoice basis.

Foreign registered person is allowed to issue debit notes and credit notes to consumers. In the case of debit note, the Service Tax is due at the time the debit note is issued or payment is received. In the case of credit note, any adjustment (where Service Tax has been declared and paid) is done via the DST-02.

Where there is a Service Tax refund due to overpayment, erroneous payment or exemption, an application shall be made online via the DST-ADM01 form, together with the relevant supporting documents. Note that there are conditions to qualify for such refund.


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The transitional rules have been updated to align with Section 52 of the Service Tax (Amendment) Act 2019, i.e.:

− For the provision of digital services spanning 1 January 2020, the proportion of such services which is attributed to the part of the period on or after 1 January 2020 is subject to Service Tax.

− For the provision of digital services before or after 1 January 2020 (non-spanning), only digital services which is provided on or after 1 January 2020 is subject to Service Tax.

− Where any payment is received before 1 January 2020 in connection with digital services to be provided on or after 1 January 2020, no Service Tax shall be charged on the payment received.

Note that the Guide on Digital Services by FSP – Guideline on:

• Application for Registration as FRP (Section 56C, Service Tax Act 2018 “SeTA2018”)

• Furnishing DST-02 Return of SToDS (Section 56H, SeTA2018)

• Payment of SToDS (Section 56I, SeTA2018)

as at 30 March 2020 is still available at the online portal for Service Tax on digital services (“MySToDS”). For further details, please click here for a copy of the guide at MySToDSwebsite.

The contents in the Guide dated 30 March 2020 is largely consistent with the Updated Guide (as at 1 August 2020).

https://mystods.customs.gov.my/


4© 2020 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Tai Lai KokExecutive Director –Head of Tax and Head of Corporate [email protected]+603 7721 7020

Long Yen PingExecutive Director –Head of Global Mobility [email protected]+603 7721 7018

Ng Sue LynnExecutive Director – Head of Indirect [email protected]+603 7721 7271

Soh Lian SengExecutive Director –Head of Tax Dispute [email protected]+603 7721 7019

Bob KeeExecutive Director – Head of Transfer [email protected]+603 7721 7029

Kuching & Miri Offices

Regina LauExecutive Director – Kuching [email protected]+6082 268 308 (ext. 2188)

Penang Office

Evelyn Lee Executive Director – Penang [email protected]+604 238 2288 (ext. 312)

Kota Kinabalu Office

Titus TseuExecutive Director – Kota Kinabalu [email protected]+6088 363 020 (ext. 2822)

Johor Bahru Office

Ng Fie LihExecutive Director – Johor Bahru [email protected]+607 266 2213 (ext. 2514)

Petaling Jaya Office

Outstation Offices

Contact us

Ipoh Office

Crystal Chuah Yoke ChinTax Manager – Ipoh [email protected]+605 253 1188 (ext. 320)


5© 2020 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Tax Whiz 2020 | Report Name


The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Petaling Jaya

Level 10, KPMG Tower, 8, First Avenue, Bandar Utama, 47800 Petaling Jaya, SelangorTel: +603 7721 3388Fax: +603 7721 3399Email: [email protected]

Penang

Level 18, Hunza Tower, 163E, Jalan Kelawei, 10250 PenangTel: +604 238 2288Fax: +604 238 2222Email: [email protected]

Kuching

Level 2, Lee Onn Building, Jalan Lapangan Terbang, 93250 Kuching, SarawakTel: +6082 268 308Fax: +6082 530 669 Email: [email protected]

Kota Kinabalu

Lot 3A.01 Level 3A, Plaza Shell, 29, Jalan Tunku Abdul Rahman, 88000 Kota Kinabalu, SabahTel: +6088 363 020Fax: +6088 363 022Email: [email protected]

Johor Bahru

Level 3, CIMB Leadership Academy, No. 3, Jalan Medini Utara 1, Medini Iskandar, 79200 Iskandar Puteri, JohorTel: +607 266 2213Fax: +607 266 2214Email: [email protected]

Ipoh

Level 17, Ipoh Tower, Jalan Dato’ Seri Ahmad Said, 30450 Ipoh, PerakTel: +605 253 1188Fax: +605 255 8818Email: [email protected]

Miri

1st Floor, Lot 2045, Jalan MS 1/2,Marina Square, Marina Parkcity,98000 Miri, SarawakTel: +6085 321 912Fax: +6085 321 962 Email: [email protected]

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Documents

Tax highlights from your advisers Guide on Digital …Head of Tax Dispute Resolution [email protected] +603 7721 7019 Bob Kee Executive Director – Head of Transfer Pricing [email protected]