Steam To Be Taxed In Malaysia In 2020 But What Does It Mean?

By Michelle J. Brohier on Nov 2, 2018

As someone who's written for personal finance before, I definitely did not expect Budget 2019 to touch on anything related to gaming. Yet here we are, and the information is as scarce as it is interesting.

First off, let's cover what we know so far about the possible tax on Steam:

Finance Minister Lim Guan Eng announced that international online service providers like Netflix, Spotify and even Steam will be taxed from January 1 2020. Lim said the purpose of the tax is meant to boost competitiveness for local companies.

In a statement, MOF says that "for online services imported by users, foreign service providers will be required to register with customs, apply and remit the relevant service taxes that will take effect starting Jan 1, 2020". - The Star Online

Based on these statements, this is looking like a form of digital tax, and while it would be something completely new in Malaysia, it’s something that’s being practised in many countries already.

Countries that implement digital service tax. Source by EY Tax Insights.
Countries that implement digital service tax. Source by EY Tax Insights.

There are a number of digital tax examples around the world. Such as in Taiwan, foreign businesses supplying digital services will have to register for Value Added Tax (VAT) in Taiwan, file VAT returns and pay VAT to the Taiwan Taxation Administration. This means the company has to pay for the tax.

Whereas in most countries that have digital tax, the tax is actually pushed on to consumers. You can see this happening in Japan, where all products are charged an extra 8%, even online services.

On the plus side, the digital tax is good income for the country as they announced they are currently losing out on “billions of ringgit”. On the downside, that doesn't mean the company won't push the extra charges on you and you could find yourself forking out more than you expected.

But let's look on the bright side

Considering that Steam offers the most affordable games, especially during the Steam Sale, the tax may not be as bad as we think. After all, Steam games may continue to be more affordable compared to console games. Even so, the tax may not just apply to Netflix, Spotify and Steam. The list may have just been an example and will increase as there's still one more year until the tax is implemented and who knows how much will change until then and, most importantly, if it will affect us gamers.

What are your thoughts about this tax? Are you okay with this or mad like hell? Share your thoughts with us on Facebook or Twitter!

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Michelle J. Brohier
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Casual gamer with a lot of thoughts and dance moves to share.
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