By LYDIA NATHAN / Pic By TMR File

The government is expected to make the implementation of Goods and Services Tax (GST) for foreign digital companies operating in Malaysia as seamless as possible, with minimal submission of documents and returns to be done electronically.

“The tax should be where the consumption occurs and where the customer is, the challenge is when the companies are not in Malaysia and how can we get them to comply?” Deloitte Malaysia indirect tax partner Senthuran Elalingam said.

He said even though Malaysia is not a member of the Organisation for Economic Cooperation and Development (OECD), there have been about 150 countries including Malaysia who have committed to implement changes in light of the digital economy.

“The changes will not be hard, as we have the framework and principles from the OECD, I think the bigger issue is how the rules were drafted before the development of digital economy — it was mainly for the typical brick and mortar type of businesses so you had to be in a particular place providing goods or services, but now you can be based anywhere,” he explained.

Deloitte Malaysia held its annual TaxMax conference themed “One bold step in the right direction” in Kuala Lumpur yesterday.

Deloitte Malaysia country tax leader Yee Wing Peng (picture) said considering the country’s readiness to ride the wave of Industry 4.0, Malaysia has to respond to the changing economic landscape — citing the establishment of the Digital Free Trade Zone — as a bold move.

“We are seeing our country transforming from agriculture to manufacturing and now service sector, and digital is a major play now. Many investors hope to see a comprehensive tax incentive framework to attract the foreign investors and local small and medium-sized enterprises (SMEs) to come in and make use of the platform to sell their products abroad.

“Especially for the SMEs, the government needs to offer some incentives in the form of funding made available for them to develop their e-commerce platform infrastructure, so they can play a meaningful role in this space and be competitive,” Yee said.