This article first appeared in The Edge Financial Daily on November 8, 2018

KUALA LUMPUR: The ministry of finance (MoF) said yesterday that foreign online services will need to register with the Customs Department to ensure a level playing field between Malaysian and foreign companies.

Malaysiakini, quoting the ministry’s National Budget Office director Johan Mahmood Merican, reported that foreign online services will need to register with the Customs under the relevant service taxes if they wish to continue operating in Malaysia.

“The government will basically engage with the larger online services which will then need to register with Customs if they want to continue supplying those services to Malaysian consumers. So this is an announcement, we will work out the details and guidelines which we will then communicate to these companies.

“I don’t want to go into individual companies, but the principle on a whole is to make sure there is a level playing field. Further details will be announced later,” he was reported as saying at a press conference after a briefing on Budget 2019 and the 11th Malaysia Plan midterm review at the communications and multimedia ministry in Putrajaya.

Johan, however, said it is likely that not all foreign online service companies will be affected by this new tax.

He also said the new tax will have a threshold, hence smaller companies may be exempted.