PETALING JAYA: The upcoming digital service tax could present an advantage to local media players, said AmInvestment Bank Research.

The research house said that it, however, remained cautious about the extent to which these companies will benefit, due to several factors.

It noted that the tax, which comes into effect on January 1, 2020, could benefit media companies with TV and over-the-top (OTT) segments such as Astro , Media Prima and Star Media Group, which have seen their subscription revenue and average revenue per user (ARPU) impacted due to competition from international OTT players such as Netlfix. “However, we are cautiously optimistic on this development as it still remains to be seen the extent to which the tax will benefit local players,” it said in a note.

One of the reasons for this, is due to Malaysia’s digital tax rate being lower than the rates in New Zealand, Russia and Norway at 15%, 18% and 25% respectively, according to Deputy Finance Minister Datuk Amiruddin Hamzah. “Furthermore, pricing alone might not deter customers from choosing preferred content provided by foreign OTT players,” it said. The digital service tax was set at a fixed rate of 6% per year, with an annual threshold of RM500,000 following the passing of the Service Tax (Amendment) 2019 Bill in Parliament.

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