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Google and FB should be taxed – MATA

PRESIDENT OF Malaysian Association of Taxation Accountants (MATA), Datuk Abd Aziz Abu Bakar. – Photo Asyraf Hamzah

PUTRAJAYA: Malaysia should tax giant tech and social media companies such as Google and Facebook (FB) taking into account the revenue that the company generates through digital advertising platforms in the country.

 

The President of the Malaysian Association of Taxation Accountants (MATA), Datuk Abd Aziz Abu Bakar, said according to the principle of tax fairness, it is appropriate for the company to be taxed, however, the implementation mechanism should be refined and reviewed properly before it is implemented.

 

He said various matters need to be refined including in terms of legislation and implementation mechanism so that it does not cause losses to Malaysia because there are countries that want to tax the company so that it takes the case to court but ultimately loses because there is no strong justification.

 

“That’s why there needs to be a mechanism and legislation that is really strong and studied in depth. It is not impossible to implement but I expect not in the near future as the study will take a long time because there are many technical issues to be resolved.

The current tax-related matter we refer to the Income Tax Act 1967. At that time, there were no more businesses made through the internet, digital concepts, online or social media. So, there must be changes especially in terms of technicality and implementation, that’s why it will take a long time.”

he told NSTP, yesterday.

 

He commented on the proposal for a tax to be levied on giant tech and media companies such as Google and Facebook (FB), both of which are said to control nearly 70 percent of digital ad spending in Malaysia.

 

The proposal was presented at the Luncheon Talk session between Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi and the Editor-in-Chief and Publication Permit Holder at the Putrajaya International Convention Centre (PICC) here yesterday.

 

Ahmad Zahid while responding to the proposal said he would bring the matter to the Cabinet meeting yesterday.

 

In addition, Abd Aziz said, the terms of Google and FB’s income should be determined to facilitate taxation.

 

“What I understand now is that Google and FB are not permanent residents in Malaysia which is in technical language, which means the company has no permanent establisment. A company or entity that is taxed in Malaysia, they need to have a permanent establishment.

Indeed, the company has opened its branches in the country and the business community in Malaysia pays them for digital advertising but we still can’t be sure what the terms of their income are? whether it is royalty or vice versa. Does the transaction take place in Malaysia or vice versa?

Therefore, in-depth research should be done to ensure that this tax implementation mechanism brings good to the country and its people, perhaps Vietnam can be used as a reference as they implement it.”

he said.

 

Meanwhile, economic analyst Dr. Ahmed Razman Abdul Latif said the imposition of tax on the company, FB, and Google should be made through a more reasonable special tax based on the amount of actual income as proposed in the European country to ensure that it is not easily manipulated.

Google and FB should be taxed – MATA

PRESIDENT OF Malaysian Association of Taxation Accountants (MATA), Datuk Abd Aziz Abu Bakar. – Photo Asyraf Hamzah

PUTRAJAYA: Malaysia should tax giant tech and social media companies such as Google and Facebook (FB) taking into account the revenue that the company generates through digital advertising platforms in the country.

 

The President of the Malaysian Association of Taxation Accountants (MATA), Datuk Abd Aziz Abu Bakar, said according to the principle of tax fairness, it is appropriate for the company to be taxed, however, the implementation mechanism should be refined and reviewed properly before it is implemented.

 

He said various matters need to be refined including in terms of legislation and implementation mechanism so that it does not cause losses to Malaysia because there are countries that want to tax the company so that it takes the case to court but ultimately loses because there is no strong justification.

 

“That’s why there needs to be a mechanism and legislation that is really strong and studied in depth. It is not impossible to implement but I expect not in the near future as the study will take a long time because there are many technical issues to be resolved.

The current tax-related matter we refer to the Income Tax Act 1967. At that time, there were no more businesses made through the internet, digital concepts, online or social media. So, there must be changes especially in terms of technicality and implementation, that’s why it will take a long time.”

he told NSTP, yesterday.

 

He commented on the proposal for a tax to be levied on giant tech and media companies such as Google and Facebook (FB), both of which are said to control nearly 70 percent of digital ad spending in Malaysia.

 

The proposal was presented at the Luncheon Talk session between Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi and the Editor-in-Chief and Publication Permit Holder at the Putrajaya International Convention Centre (PICC) here yesterday.

 

Ahmad Zahid while responding to the proposal said he would bring the matter to the Cabinet meeting yesterday.

 

In addition, Abd Aziz said, the terms of Google and FB’s income should be determined to facilitate taxation.

 

“What I understand now is that Google and FB are not permanent residents in Malaysia which is in technical language, which means the company has no permanent establisment. A company or entity that is taxed in Malaysia, they need to have a permanent establishment.

Indeed, the company has opened its branches in the country and the business community in Malaysia pays them for digital advertising but we still can’t be sure what the terms of their income are? whether it is royalty or vice versa. Does the transaction take place in Malaysia or vice versa?

Therefore, in-depth research should be done to ensure that this tax implementation mechanism brings good to the country and its people, perhaps Vietnam can be used as a reference as they implement it.”

he said.

 

Meanwhile, economic analyst Dr. Ahmed Razman Abdul Latif said the imposition of tax on the company, FB, and Google should be made through a more reasonable special tax based on the amount of actual income as proposed in the European country to ensure that it is not easily manipulated.

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