An economist says that consumers will experience an increase in prices for streaming services and digital advertisements at the onset of March due to a 2% sales and service tax (SST) hike.
Carmelo Ferlito, CEO of the Center for Market Education, notes that this will impact streaming companies, particularly those operating internationally, as local taxes are added to the base subscription price, according to FMT.
Ferlito anticipates that international companies will find it complex to absorb taxes in different countries, leading to an overall rise in prices for streaming and digital services.
According to a notice on the MySToDS digital tax website, the customs department announces an increase in the tax rate on digital services from 6% to 8% starting 1 March 2024.
This adjustment follows the SST hike disclosed by Prime Minister Datuk Seri Anwar Ibrahim during the national budget presentation in October of the previous year. The digital tax, enforced since 1 January 2020, imposed a 6% levy on imported online services, encompassing software, music, video, and digital advertising.
126 foreign digital services, including Google, Netflix, Spotify, and Airbnb, have reportedly registered with the customs department to comply with the tax regulations.
Veerinderjeet Singh, vice-chair of the ICC Global Tax Commission, suggests that while the theoretical impact on consumer prices may be marginal, the cumulative effect of the tax could prompt some companies to raise their prices.
He highlights the domino effect of the service tax, affecting various service types, and notes that companies may also raise prices due to escalating production and other costs caused by inflation and supply chain disruptions.
