In 2002, the Malaysia government introduced the Income Tax Rules 2003 (Deduction for Cost of Developing Website) and allowed eligible taxpayers (individuals or companies) to deduct their cost in developing an E-commerce website. The introduction of the tax rule aims to encourage and improve the growth of the E-commerce industry and boost the Malaysian economy.
What is “E-commerce enabled”?
E-commerce enabled means a system of processes where transactions involving the transfer of information, products, services, or payments can be made through electronic networks for an electronically confirmed consideration as verified by the Suruhanjaya Komunikasi dan Multimedia Malaysia (MCMC).
What are the requirement and qualifying criteria?
The above tax deduction may be given to an applicant upon fulfilling the following requirements:
- The applicant must have a website.
- The Domain Name System (DNS) for the website must be registered under Malaysia (.MY) domain names and hosted on a web server that is located in Malaysia.
- The website must be configured/enabled with DNS Security Extensions (DNSSEC).
- The website can be accessed via both Internet Protocol (IP); Internet Protocol version 4 (IPv4) and Internet Protocol version 6 (IPv6).
- There must be server software or applications that supply information to the web server on request. There must be:
a. A shopping cart or any programs that facilitates the collection of information.The program is a way to let web shoppers select the products or services they want; preview the sales amounts; delete items if they change their minds; enter their payment information and delete items if they change their mind; enter their payment and shipping information; cancel the order completely if they want.b. Security capabilities that will allow the encryption of data during the transfer of customer information.
- The collection of payment may be made online or offline. If the collection of payment is carried out online, there must be:a. Software to process transactions and send information to all of the involved parties (seller’s bank, customer’s bank, etc.).b. Security capabilities that will allow the encryption of data during the transfer of customer information.
- The application will not be considered complete and would be rejected if it is:
a. missing mandatory information as required in the application form;
b. contains misleading or false information;
c. defective in any way;
d. not accompanied with signature of the applicants; or
e. not accompanied with the processing payment.
How is the application procedure?
The application procedure is as follows:
- Application must be made by completing the form entitled “Application Form for Certification of E-commerce Website” and a processing fee of RM100.00 (Ringgit Malaysia One Hundred) by way of crossed cheque made payable to Suruhanjaya Komunikasi dan Multimedia Malaysia.
- For purposes of this application, MCMC may request for additional information.
- Once the certification has been obtained, the applicant must attach the certification to the income tax return form for submission to the Inland Revenue Board.
MCMC reserves the right to amend any of the conditions and criteria for applications over time depending on advances in technology and other conditions.
Application Form – Download here
Full Guideline for the Annual Certification of E-commerce Website – Download here