GOVT IN TALKS WITH OECD TO REGULATE DIGITAL PLATFORMS IN MALAYSIA
The government is seeking council with the Organisation for Economic Cooperation and Development (OECD) to find measures to impose tax on digital platforms, particularly among foreign players that are operating in the country.
Second Finance Minister Datuk Seri Johari Abdul Ghani said the authorities are hoping to find the best possible solution to regulate the digital economy amid the increasing number of transactions that are taking place virtually.
“At the moment, we are expecting feedback from the OECD, which is also in a dilemma right now in finding ways to impose the digital tax,” he told reporters on the sidelines of the Register of Property Managers launching ceremony in Kuala Lumpur yesterday.
“The digital platforms are raking in a lot in overall turnover amounting to billions of dollars, compared to the people like you and I, which are only the users and subscribers,” he said.
Johari said that currently 20% of transactions in the country are conducted digitally.
He said the main issue with an unregulated digital economy is that most of the platforms are not hosted domestically.
“That’s the reason why we want to have an understanding with the OECD and also to study their methods in imposing digital tax in their respective countries,” he said.
According to Malaysia Digital Economy Corp, the digital economy contributed some 18.2% to Malaysia’s gross domestic product (GDP) last year and the figure is expected to exceed the projected target of 20% earlier than 2020.
The government has also allocated approximately RM83.5 million for the first phase of the Digital Free Trade Zone in KLIA Aeropolis, which is also expected to further spur the growth of local small and medium enterprises and attract investments worth up to RM700 million.
Meanwhile, Johari said the ringgit’s performance has shown a positive momentum as a result of the stronger economic growth supported by a robust GDP and the rise in oil and gas price.
“The performance of the currency is a positive effect from the domestic and global economy, which we have also benefitted from our export growth.
“As for the 11 months of 2017, exports had risen to approximately 20.2% and we are projecting the economy to continue to grow between 5% and 5.5% in 2018,” he said.
Johari added that the global economy is expected to have a positive movement between 3.7% and 3.8%.
He said the increase in the global trade would also further strengthen the ringgit as Malaysia is an open economy.
Malaysia’s GDP growth expanded 6.2% in the third quarter of 2017 (3Q17), the highest since 2Q14, driven by domestic demand and particularly, private sector spending.
Domestic demand grew 6.6% in 3Q17 compared to 5.7% in 2Q17 — boosted by private sector expenditure which rose 7.3% versus 7.2% in 2Q17, and public sector spending, which grew 4.1% versus 0.2% in 2Q17.
Moreover, private consumption increased 7.2% during 3Q17, slightly higher than 7.1% in 2Q17.