KUALA LUMPUR, May 6 — Several business organisations are requesting for a review of how the withholding tax (WHT) is implemented, particularly with regard to local online entrepreneurs who use the services of foreign companies such as Meta or TikTok.
Malay Chamber of Commerce Malaysia (DPMM) president Norsyahrin Hamidon said that local e-commerce entrepreneurs currently have to bear the 10 per cent WHT when using services such as advertising or consultancy, which should actually be borne by non-resident companies.
The WHT implementation in digital advertising directly impacts the operating costs of online traders, especially small and medium enterprises (SMEs) that rely on these platforms to generate income.
“This indirectly reduces profit margins, increases the risk of losses, and limits the ability of traders to grow,” he said during a media conference on WHT and the challenges in the digital traders’ ecosystem today.
The media conference, coordinated by the Malaysia Cyber Consumer Association (MCCA), was hosted by DPMM, the Malaysia e-Commerce Entrepreneurs Association (PUeDM), and MCCA.
PUeDM president Syed Gaddafi Syed Saifuddin said that the imposition of the tax has further increased the burden of entrepreneurs who are required to pay total taxes of up to 18 per cent.
This is due to the combination of the Sales and Service Tax and WHT on each digital advertising transaction, which creates an imbalance against the approach taken by neighbouring countries such as Indonesia.
“Businesses in Indonesia can also submit a special form along with the Certificate of Residence from platforms such as Meta or Google to legally reduce the WHT rate to zero per cent,” he said.
Therefore, Gaddafi asked that the government and the Inland Revenue Board (LHDN) review the existing policy and consider an alternative approach, including simplifying the implementation of double taxation agreements to ensure a fairer taxation system aligned with the growth of the digital economy.
Meanwhile, MCCA president Siraj Jalil suggested holding a roundtable to discuss this issue, with industry players and ministries such as the Finance Ministry, the Domestic Trade and Cost of Living Ministry, LHDN, and the Malaysian Communications and Multimedia Commission participating.
“This is to discuss the structure of taxation within the country’s digital ecosystem,” he said.
