Shortly after Google announced it will impose a 6% digital tax charge in January next year, Facebook has said that its ads in Malaysia are subject to a 6% service tax. This affects advertisers whose "Sold To" country on their business or personal address is set to Malaysia.
The service tax is added whenever you're charged for your ads regardless of whether you're purchasing Facebook ads for business or personal purposes.
The company added that if one uses a manual payment method for Facebook ads, the tax will be applied when the ad account is funded. For example, if a US$100 charge was made because a company has reached its US$100 billing threshold, the subtotal for the charge will be for US$100 in ad costs. A 6% service tax will then be added on top of that, bringing the total amount charged to US$106.
"Because service tax is added on top of charges, you won't reach your billing threshold faster, but you may be charged more than your billing threshold amount," it explained. Facebook also advised companies and individuals to approach local tax advisors or authorities if they have additional queries.
The service tax was introduced during Budget 2019 as an effort to neutralise the cost advantage faced by physical retailers against their virtual storefront counterparts, especially those operated by foreign entities. It was once again reiterated during Budget 2020 by Finance Minister Lim Guan Eng, who said that the Digital Services Tax will be implemented with effect from 1 January 2020, and will include services such as, but not limited to downloaded software, music, video or digital advertising.
Across the border in Singapore, Netflix, Spotify and Amazon are among the foreign overseas services that will be charged GST on their sales of digital services to Singapore consumers with effect from 1 January 2020. The Inland Revenue Authority of Singapore said over 100 overseas digital service providers have registered for GST under Singapore’s Overseas Vendor Registration regime. The news came one year after the Singapore parliament passed a GST bill that allows it to collect GST from overseas services beginning next year.