Question

The principal activity of Easy Software Bhd is selling software. It maintains a website, which is hosted in a server located in Singapore, to facilitate the customers in choosing the products, answering queries, ordering online and making payments for the products purchased. All the business activities such as maintenance of the website, supplying of information for the website and procurement of the software are carried on in Malaysia.
Required:
Determine whether the income derived by the company is taxable under the Income Tax Act 1967 and the reasons for arriving at your answer.

Answer 1

Answer :

Yes,

The income derived by the software company is taxable in Malaysia under Income Tax Act 1967.

Reason :

As per the guidelines on e-commerce regarding Malaysian tax,

A server / website itself does not carry any meaning in determining the derivation of income.

Business income from E commerce would be considered as Malaysian, if business operations are being carried on in Malaysia, regardless of location of the server.

Considering the above factor in the given case,

Business income derived by Easy software by selling softwares will be taxable in Malaysia, irrespective of the fact that the server is in Singapore.

Because all the business operations such as maintenance of the website, procurement of the software are being carried on in Malaysia.

~~~ please upvote. Thanx.