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Tax for e-Commerce

Introduction

  • e-Commerce is any commercial transactions conducted electronically including the activity of providing information, promotion, marketing, supply, order of delievery of goods and services, even though payment and delivery relating to such transactions may be conducted offline
  • Individual / company involves in e-Commerce activities will be taxed under Income Tax Act 1967

e-Commerce Medium

  • Websites (.com, .my, .net, .blog, .facebook, twiter, forum, etc)
  • Mobile Phone

Responsibility of the website owner

  • Every business owner must have an income tax file number
  • Declare income / losses received from e-Commerce activities
  • Complete and submit Form e-B via e-Filling
  • if business is a partnership :
    • Complete and submit Form e-P via e-Filling (responsibility of managing partner)
    • Submit Form e-P without partnership’s account
    • Inform in wrting to HHDNM if partnership cease operation or changes to sole proprietorship or becomes a private limited company
  • Make tax payment (ByrHasil)
  • e-Commerce practitioner is obliged to show the business information such as the name of the business, registration number and others at the website (Company Act 1965, Section 121 (1)(b) and Consumer’s Protection Rules [electronic commercial transaction] 2012)

Required Documents to be Kept

  • Statement from payment gateway (Paypal, ipay88, MOL, etc)
  • Domestic and personal expenses
  • Bank Statement
  • Income Statement from advertising company (such as Nuffnang, Google Adsense, etc)
  • Confirmation of sales and purchases via e-mail, etc
  • Agreement
  • Original receipts fro each deduction / expense claimed, etc

Business Expenses

Allowable Non-Allowable
Expenses incurred in the production of business incomeExample :

  • Web Maintenance Fees
  • Web Consultant Fees
  • Domain Name Renewal Fees
  • Internet Acccess Fees
  • Telecommunication Equipment, Modem
  • Rental for Server
  • Utilities
1. Domestic and personal expenseExample:

  • Personal Electricity and water supply bill

2. Purchase of personal assets

Example:

  • Car
  • House
  • Furniture

Capital Allowance

  • Deduction for capital allowance on business assets are claimable and will be deducted againts adjusted income

Capital Allowance Rate

Office Equipment, furniture and fittings10%

Type of Allowance Asset Type Rate
Initial Allowance All types of assets 20%
Annual Allowance Motor Vehicles, Heavy Machinery 20%
Plant and Machinery 14%
Computer 40%

Credits:

– above information are from Lembaga Hasil Dalam Negeri Malaysia (www.hasil.gov.my), e-Commerce 2015 pamphlet (LHDN/R18/15)