Malaysia e-book GST rate debate

Thu 19th Feb 2015

As Malaysia prepares for the introduction of a full Goods & Services Tax regime from 1 April 2015, there is still a debate as to whether e-books and printed books should enjoy a nil rate classification.

The proposed Malaysian GST rate is 6% for all taxable goods and services. Printed reference books, dictionaries and encyclopedias will be subject to a nil rating. Other books, including electronic books, will be at the standard rate. They were not subject to tax under the current Sales and Services Taxes.

This will create a problem since foreign e-book providers, such as Amazon Kindle, will not have to charge GST on their sales to Malaysian consumers.

EU VAT on e-books

In the European Union, under the terms of the EU VAT Directive, printed books may be classified at a reduced or nil rate. However, this does not extend to digital electronic books. However, countries such as Malta, Italy, France and Luxembourg have defied this position, and moved e-books to reduced rates. The European Court of Justice is challenging this position following a referral by the European Commission.