We believed more and more advertisers are seeing this announcement on their Facebook Page or getting news about Malaysia Service Tax.
Based on the official announcement from Facebook
“Beginning 1 January 2020, Facebook ads in Malaysia are subject to a 6% service tax. This affects advertisers whose “Sold To” country on their business or personal address is set to Malaysia. “
What is Malaysia Service Tax?
This service tax is added whenever you are running advertisements on Facebook and get charged when your ads whether it is for Business or Personal purposes. As long as you pay for Facebook ads, the tax is applied when you do the payment or fund the advertising account.
For instance, if you recently spent RM 1000 and get charged for it on your advertising account. The total of the charge will be RM 1060 whereas RM 1000 is the ad cost and 60 is the 6% service tax added on top of your advertising spending. As the service tax is added on top of charges, you will be charged more than your advertising spending by an additional 6% when the payment is made.
The same goes for all other digital services like Netflix, Google, Spotify, Steam and other platforms that provides digital services in Malaysia.
How does that Impact Us?
As Facebook did not absorb the 6% tax into their services, it means the advertisers and businesses is going near to bear the 6% cost. Additional 6% cost will be incurred on every ad spend not only on Facebook but also on other digital platforms like Google, Steam, Twitter & LinkedIn as well.
This means that advertisers in Malaysia will need to have a more strategic digital marketing planning to ensure every penny spend on digital advertising worth the price to maintain or even achieve a better Return of Ad Spent (ROAS) for their business.
What do you think about this move?
What’s the impact on your digital marketing plan in 2020?
Share with us in the comment section below!😉