If we implement the SST where growth is happening, it is going to cause our country to lose out to other competing countries, says Pikom chairman

By SHAHEERA AZNAM SHAH / Pic By ISMAIL CHE RUS

The implementation of Sales and Services Tax (SST) on information and communications technology (ICT) products and services would hinder the country’s digital economy growth, said the National ICT Association of Malaysia (Pikom).

Pikom’s chairman Ganesh Kumar Bangah said exemption from SST will allow Multimedia Super Corridor (MSC)-status companies to grow.

“Since the implementation of MSC, we have been successfully moving towards that direction.

“However, the implementation of SST on ICT products and services is our biggest concern at the moment as it would be detrimental to the company and will take us a step back,” he said at the launching of ShopFest in Kuala Lumpur yesterday.

Ganesh said the implementation of SST on the country’s developing digital economy would cause the country to lose out to other ICT-producing countries.

“If the ICT industry, which is currently the fastest growing industry in Malaysia, is to be taxed, it could be detrimental.

“South-East Asia’s digital economy will grow from US$10 billion (RM41 billion) to US$88 billion by 2025 in e-commerce alone.

“If we implement the SST where growth is happening, it is going to cause our country to lose out to other competing countries,” he said.

Ganesh said implementating the SST on online services would also cause our country to lose out to international products, which are not subjected to tax.

“Take the cloud service for example, if we implement the SST on local cloud services, our concern is that Malaysians will opt for international cloud services, which are not subjected to the SST instead.

“The tax will also delay small and medium-sized entrepreneurs’ adoption of cloud services,” he said.

According to Ganesh, under the old administration, ICT services were not subjected to the SST but they were, however, subjected to the Goods and Services Tax (GST).

He added that by taxing ICT services such as training will also hamper the development of skilled ICT professionals as it will increase the cost.

“ICT training was not subjected to the GST when it was applicable. However, since it is classified as a service, it may be subjected to the SST.

“We hope that the SST will not be imposed on ICT training as skills are the key for further development and growth,” it said.