In May 2016, the Treasury Secretary-General of the Malaysian Ministry of Finance ("MOF") announced, in very general terms, the intention to tax online businesses. Based on public news reports on the announcement, it is understood that the Malaysian Inland Revenue Board ("MIRB") has been tasked to conduct a thorough evaluation of the taxation of online businesses, and the MOF is interested in considering the introduction of a requirement for online businesses to register with the Companies Commission of Malaysia.

In a media statement released by the MIRB, the MIRB had sought to clarify that there is no new tax regime per se for online businesses, and that the intention is to ensure that the traditional income tax rules are applied to online business in the same way that conventional/brick-and-mortar businesses are currently being taxed.

This seems to indicate that the current focus of the MIRB is on ensuring that Malaysian businesses which earn Malaysian taxable income through online businesses comply with the existing tax laws, instead of the introduction of new tax obligations for non-resident suppliers making supplies of digital goods and services into Malaysia. That said, in view of the unilateral measures introduced by some countries in Asia (i.e., Indonesia and India) which are aimed specifically at non-resident suppliers who supply digital good and services to local customers, we will still have to wait and see whether any changes are introduced after the MIRB completes its evaluation exercise.