User Awareness on the Implementation of Digital Service Tax in Malaysia

Abstract

The development of information technology and rising internet usage has fueled the expansion of digital-based services across the globe. The government started charging a six percent digital service tax (DST) to foreign digital service providers (FSPs) on 1st January 2020. In its first year of operation, this tax brought in more than RM400 million for the government. Digital Service Tax is only imposed on taxable digital services that are provided to consumers in Malaysia. Although the implementation of DST has been previously announced and the act has been enacted, there is a possibility that users have low awareness due to lack of information and unclear about the purpose of DST implementation. Moreover, a lack of understanding of the law may be a factor in the consumers' need for more awareness. Thus, this study aimed to examine factors influencing user awareness on the implementation of DST in Malaysia. This study applied a quantitative research method where questionnaires were distributed through Google forms among individual users in Klang Valley. A total of 63 respondents have been received, and the Statistical Package for Social Sciences (SPSS) has been used to analyse the data. According to this study, approximately 50% of the respondents learned about DST from television, radio, Internet and websites. Furthermore, the relationships between self-attitude, economic factors and user acceptance towards user awareness have been tested. Nevertheless, only economic factors and user acceptance have a significant positive influence towards the user awareness in the implementation of DST in Malaysia. Disseminating DST information to all users will increase their understanding and inculcate positive self-attitude towards acceptance of new tax policy. Therefore, the result of the study will assist the regulator, particularly the tax authority in finding a solution that could increase the level of tax awareness among the public and users.