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The IRB has issued a new Guideline on Taxation of Electronic Commerce Transactions dated 13 May 2019. The IRB’s new guideline seeks to provide guidance on the tax treatment of e-commerce transactions. The guideline defines what is meant by an “e-commerce” transaction and identifies the common new business models as follows:- 

  1. Online trading / service providers – e.g. lazada
  2. App Stores – e.g. Spotify
  3. Online advertising – e.g. display ads and search engine ads
  4. Cloud computing – e.g. AirBNB, Uber
  5. Payment services – e.g. ipay88
  6. Digital currency / token – e.g. BitCoin

The guideline then covers the scope of tax liability for:

  • e-commerce business income
  • e-commerce transactions falling under “section 4A - special classes of income”
  • e-commerce transactions regarded as “royalty” under the new expanded definition of “royalty” in section 2, effective from YA 2017.

Please note that this guideline supersedes the Guidelines on Taxation of Electronic Commerce issued on 1 January 2013.

Guideline on Taxation of Electronic Commerce Transactions