Digital Tax 6%: How much will you have to pay in 2020?

We’re about to enter 2020 in a blink of an eye and while many may be looking forward to a new year, we Malaysians might be slightly worried about what’s coming our way — the 6% digital service tax.

We already heard several companies announcing the change in pricing due to the tax, including Google, Netflix, and Sony. While some companies have yet to confirm whether they will increase the price of their products and services, here’s an estimation on how much you’ll have to pay for some of the most popular digital services in 2020.

Netflix

Netflix has announced the increased price in its plans; the Basic plan will soon cost RM35/month, the Standard plan RM45/month, and the Premium plan RM55/month. Let’s do some maths, shall we? If added with the 6% tax, then each plan should supposedly be priced at: 

• Basic plan: RM34.98/month
• Standard plan: RM44.52/month
• Premium plan: RM54.06/month

If we’re nitpicking, then I’ll have to point out that Netflix will be getting an extra RM0.02, RM0.48, and RM0.94 from each plan respectively, but let’s not go there. After all, we’re not sure if there are other charges included in the whole process. Plus, Netflix isn’t increasing the price of its mobile-only plan which costs RM17/month. If we take into account the 6% tax that Netflix should be absorbing for this plan, then they’d have to pay an extra RM1.02 per subscription on their end. 

Spotify

Ahh, one of our favorite music streaming services. If you’re a non-Premium users, lucky you. If you’re a Premium user and Spotify chooses to push the tax to the consumer end, then these are the prices you’ll have to pay when it comes to 2020.

• Spotify Premium: RM14.90 + 6% = RM15.79/month
• Spotify Premium Family: RM22.40 + 6% = RM23.74/month

We can also assume Spotify to round these numbers up, leading to RM15.80 and RM23.80 for these plans. If you’re a Spotify Premium user who subscribed on mobile via telco plans, then your RM15.90 plan might even go up to RM16.85 once it’s 2020.

Google

Google is one of the earliest companies to announce the implementation of the 6% digital tax on its services. You should be expecting all the movies, books, apps and in-app purchases in the Google Play Store to come with a 6% digital tax. For example, if you’re renting “The Lion King” in Play Store for RM13 now, you might have to rent it for RM13.78 in 2020.

As for G Suite users, these are the changes that we’re assuming will be made.

Current pricing (per month)

• Basic edition: $6
• Business edition: $12
• Enterprise edition: $25

Estimated new pricing (per month)

• Basic edition: $6.36
• Business edition: $12.72
• Enterprise edition: $26.50

But on the bright side, Google has a promotional price that is valid until April 2, 2020, for the basic and business editions. They’re currently priced at $5.40/month and $10.20/month.

Adobe

There are many in the creative industry, but sadly they’ll also be affected by the 6% digital tax if they’re subscribed to Adobe services. These are the different prices you’d have to pay if you’re paying for these annual plans monthly.

Current pricing (per month)

• Photography plan (20GB): RM44.41
• Photography plan (1TB): RM88.87
• Single app: RM93.31
• All apps: RM236

Estimated new pricing (per month)

• Photography plan (20GB): RM47.07
• Photography plan (1TB): RM94.20
• Single app: RM98.91
• All apps: RM250.16

Of course, we may have hope if Adobe chooses to absorb the tax for us.

Microsoft Office 365

What’s the point of a Windows laptop without Office 365? If Microsoft pushes the tax to consumers, we’ll have no choice but to bite our tongues and pay the new price. 

Current pricing (per year)

• Office 365 Home: RM359
• Office 365 Personal: RM269

Estimated new pricing (per year)

• Office 365 Home: RM380.54
• Office 365 Personal: RM285.14

Well, if you only use Excel, Word, and PowerPoint, then you should probably get the Office Home & Student 2019 that only requires a one-time payment of RM529. Just a word of advice, get it before 2020 or you’ll be risking an extra 6% tax.

Facebook

As I’ve said, there’s no escape. Many started promoting their products and services via Facebook ads, and these ads are subjected to a 6% tax. However, Facebook says that this only applies to those “whose “Sold To” country on their business or personal address is set to Malaysia”. So, if your Facebook ads cost RM100, you’ll be charged RM106 in total.

Sony PlayStation and Steam

Gamers, you probably already saw this coming. I’m not going to list every game there in your PlayStation Store and Steam Store, but you know the gist. Thankfully, Sony isn’t updating the price of its PlayStation Plus service — but be warned, that may change over the months.

Some of you may be worried about e-commerce platforms like Shopee and Lazada being affected by this new tax. Well, iMoney reported that there’s import duty and sales tax for the majority of the local e-commerce transactions, so digital tax shouldn’t be affecting them. There’s also no need to worry about local services like Grab, Astro, and iFlix as they are all Malaysian services.

Also, if you’re sulking about the 6% tax, here’s a little piece of information that may make you feel better — there are many other countries with higher taxes; Russia has a 20% tax, Norway has a 25% tax and Bangladesh has a 15% tax. If we (try) to be positive, our country is actually one of the few with lower digital tax.