Streaming services are likely to increase the price of their subscriptions come March as a sales and service tax (SST) hike goes into effect. This comes after the customs department announced on MySToDS that the service tax rate levied on digital services will be increased from 6% to 8% starting 1 March 2024.
The 2% increment was announced by the government last October during the Prime Minister’s tabling of Budget 2024. Unsurprisingly, this also applies to the existing digital service tax. However, certain categories such as food and beverages as well as telecommunication will be exempted from the hike, remaining at 6%.
Regarding this change that’s about to take place, Center for Market Education CEO Carmelo Ferlito said that he expects prices for streaming and other digital services to increase. This is potentially because it would be too complicated for large foreign companies to absorb taxes to keep their offerings at a certain price point.
The digital service tax was implemented in 2020 and in its first year, the government had collected RM428 million in revenue. Secretary general of treasury Johan Mahmood Merican stated that the government expects to collect an additional RM3 billion from the SST hike. As for which companies will be affected, the customs department revealed back in 2020 that there are at least 126 registered foreign digital service providers, including Google, Netflix, Spotify, and Airbnb.
(Source: FMT)
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