Facebook has announced that FB ads are subjected to 6% service tax starting 1st January 2020. This is in line with the introduction of service tax on digital services that was announced last year. For all advertisers on Facebook, get ready to pay more next year.
The service charge for FB ads will affect those who do FB marketing
According to Facebook’s notice, this will affect advertisers that have set their “sold to” country on their business or personal address to Malaysia. The 6% SST wil be added whenever the user charged for the ad regardless if it is purchased for business or personal purposes.
How is digital tax calculated?
It is also mentioned that if the payment for the ads is done manually, the tax will be applied when the user’s ad account is funded. As an example, if you were recently charged $100 because you reached your $100 billing threshold, the total for the charge will be for $100 in ad costs plus a 6% service tax. So, you will pay $106.00 in total for that charge.
Meaning, you will only be charged when you hit the billing threshold and not for every ad that you make. The service charge for the FB ads is calculated as a total lump sum.
More companies to charge 6% digital tax
Facebook is the second company to charge a digital tax aftter the announcement of the implementation of a digital tax on online services by the government. Google is the first company to do so.
Starting 1st January 2020, all digital services, including download/streaming of content, music, video or digital advertising will subject to a 6% digital tax. This will likely affect services like Netflix and Spotify and even game platfroms in the future as well.