Tokenize confident 6% service tax won’t have major impact
PETALING JAYA: Tokenize Technology (M) Sdn Bhd is confident that its move to impose the Sales and Service Tax (SST) on trading fees on its platform beginning today – the first licensed digital asset exchange (DAX) in Malaysia to do so – will not have a major impact on its business, citing that it is a small amount.
Tokenize founder and CEO Hong Qi Yu believes that the SST (6% service tax) will not be a big concern as it applies only to the transaction fee, currently at 0.8%, and translates into a small amount; moreover, it has conducted outreach efforts to clarify that the SST will be charged solely on the transaction fee and not the principal amount.
He pointed out that Tokenize is still running its 0% maker fee on the platform, which effectively reduces the tax burden of a client. A “maker” is when one places an order, and it does not trade immediately, so the order stays in the order book and waits for someone else to fill/match with it later.
“Nonetheless, we recognise that the introduction of the SST is an important source of revenue for the government,” Hong told SunBiz, adding that the SST is in line with the Service Tax (Digital Services) Regulations (2020) and the Amended (Amendment 2/2020) — Service Tax (Digital Services) Regulations (2020).
With the introduction of the SST, fees paid by users will see a premium of 6%. As of now, Tokenize Xchange Malaysia only charges users a fee of 0.8% from all orders fulfilled as a taker order. A “taker” is someone who decides to place an order that is instantly matched with an existing order on the order book.
For example, Trader A would like to place a buy order worth RM10,000.00. His order would be subjected to a fee of 0.8% which is equal to RM80.00. The 6% SST will be levied on the trading fee, and amounts to RM4.80. This brings the total payable sum to: RM10,000.00+RM80.00+RM4.80 = RM10,084.80.
Conversely, Trader B would like to place a sell order worth RM10,000.00. His order would be subjected to a fee of 0.8% which is equal to RM80.00. The 6% SST will be levied on the trading fee, which is RM4.80. This brings the total receivable amount to RM10,000.00-RM80.00-RM4.80 = RM9,915.20.
If the order is filled as a maker, the trading fee and the SST will be immediately refunded into his account.
The other two recognised market operators operating DAX are Luno Malaysia Sdn Bhd and Sinegy Technologies (M) Sdn Bhd. Both have yet to introduce the SST.
“Luno is currently undertaking a detailed study into SST and how we will approach this. We are working with multiple parties to ensure that we are in compliance with all local regulations. We will keep our customers informed once we have a firm decision,” said Luno country manager Aaron Tang.