Overseas companies on technology services such as Steam, Netflix and Spotify must register with the Customs and impose and remit the relevant service tax effective January 1, 2020.
Examples of these services include software, music, video or any digital advertising.
These tax measures will balance competition between retailers and online stores, especially online stores owned by overseas companies.
It is one of the essence of the Budget 2019 on the technology outlined by the Government.
Additionally, the Government will allocate RM10 million to the Malaysian Digital Economy Corporation to develop and promote E-Sports, as an activity and industry of the young generation, involving software engineers and digital game developers.
For online imported services by users, foreign service providers will be required to be registered with the Customs, imposing and remitting related service taxes with effect from 1 January 2020.
To promote the development of the digital economy, the Government will implement the National Optical Fiber and Connectivity Fiber Plan with an allocation of RM1 billion. The plan aims to develop broadband infrastructure in order to ensure that the spectrum distribution is implemented more effectively. In addition, high speed broadband services are targeted at reaching 30 Mbps in rural and remote areas within 5 years to enable Malaysia to achieve world-class infrastructure at affordable prices. The Government will also enforce Mandatory Standards of Access Price which is expected to lower fixed line broadband prices at least 25% by the end of 2018.
Additionally, the Government has allocated RM 210 million for 2019 to 2021 to encourage the transition to Industry 4.0. The Malaysian Productivity Corporation will run the Readiness Assessment program to assist 500 Small and Medium Enterprises (SMEs) to switch to Industrial Technology 4.0.
Additionally, the Government through BPMB will provide the Industry Digitalisation Transformation Fund with a fund size of RM 3 billion with a 2% interest rate subsidy incentive. The fund aims to accelerate the industry to adopt smart technologies that include robotic and artificial intelligence (AI).
In order to further promote investment in the green technology industry, a RM 2 billion fund will be provided under the Green Technology Financing Scheme with the Government accommodating a 2% interest rate subsidy for the first five years.