KUALA LUMPUR: The Finance Ministry is finalising a study on a suitable mechanism to tax online businesses.
Finance Minister II Datuk Seri Johari Abdul Ghani said the study would look into among others the necessity to impose a taxing system, its impact and suitability.
"At the same time, the ministry is evaluating and monitoring the implementation of tax by Organisation for Economic Co-operation and Development (OECD) for the digital economy and related revenue," Johari said during a winding up on the debate on the motion of thanks of Yang di-Pertuan Agong Sultan Muhammad V's royal address.
Last week, Teo Nie Ching (DAP-Kulai) raised an issue over the possibility of taxing online businesses through social media network including Facebook.
It was reported earlier a proposal was raised to tax online businesses on Google and Facebook, both of which controls 70 per cent of the country's digital advertising expenditure.
The proposal had caught the attention of Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi, who said the matter would be brought to the cabinet.
Johari said at present there was no taxing system imposed on advertisements hosted by the two giant companies.
He said the country's current tax system only allowed collection from companies with permanent setups here.
"Google and Facebook are not permanent companies in Malaysia, although they have offices here.
"However, if both companies move to declare their revenue, we can impose a tax on them. No problem.
"Nevertheless, it is not easy to determine their revenue (for tax purposes) since the companies are based overseas."
Johari said unlike several countries, Malaysia would not impose sanctions to coerce such companies into paying taxes.
"We are open (business-friendly) and such a move (imposing sanctions) will not be implemented because of the impact on consumers.
"We can amend laws (to address taxing issues) but it will take time because we need to be in line with international laws."
Meanwhile, on Goods and Services Tax (GST), a total RM41 billion had been collected in 2016, in which RM20 billion had been returned as tax claims.
And as for 2017, Johari said government managed to collect RM44 billion in GST and RM22 billion returned as claims.
Reported by Syed Umar Ariff, Rohaniza Idris, Idris Musa, Luqman Karim, Nur Lela Zulkipli and Siti Nur Mas Erah Amran.