Social media merchants must declare income: Inland Revenue Board

PETALING JAYA: Individuals or businesses selling their wares on social media, which are not registered with the Companies Commission of Malaysia (SSM), must declare their income and file their income tax returns, according to the Inland Revenue Board (IRB).
“They (social media-based online businesses) still have to submit their income declaration to IRB even though they did not register with SSM,” a spokesman for the IRB told SunBiz via e-mail.
Online entrepreneurs are leveraging on social media platforms, such as Instagram and Facebook, to set up their virtual stores without having to operate through a website or a brick and mortar store.
While there are copious amounts of online stores particularly online fashion boutiques on these platforms, not all of them are registered with SSM.
An SSM spokesman told SunBiz that while taxation is not within its jurisdiction, the commission requires all business activities, irrespective of whether or not they are carried out through social media or physical premises, to be registered under the Registration of Business Act 1956.
“SSM will take action against entrepreneurs who failed to comply with the relevant laws,” the spokesman added.
It is learnt that businesses which are registered under the enterprise category will not have to file their annual returns while renewing their licences, whereas companies incorporated under the private limited, otherwise known as “Sendirian Berhad”, will have to file their annual returns while renewing their licence.
Although there is no particular provision in the Income Tax Act 1967 regulating online businesses, Section 4 of the Act stipulates that business income will be subject to tax after deducting allowable expenditures and tax reliefs claimable by the trader.
According to the tax authorities’ Guidelines on Taxation of Electronic Commerce, e-commerce businesses will be subjected to the same tax treatment as conventional businesses, given that the income is accrued from or derived in Malaysia.
Individuals operating online businesses will be subjected to the individual income tax rate of between zero and 28%. E-commerce businesses operated by companies will be taxed between 19% and 24%.