Tax for Online Sellers: e-Commerce, Influencers and e-Hailing

Business income — s.4(a) ITA 1967

Under section 4(a) of the Income Tax Act 1967 (ITA 1967), gains or profits from a business, trade, vocation or profession are chargeable income. This includes any form of business — including business carried on online.

HASiL lists Business via Internet (Digital Economy) as an example of an individual business. People carrying on digital business are subject to Malaysian income tax under ITA 1967.

Source: HASiL — Introduction to Individual Income Tax; HASiL — Digital Business; Income Tax Act 1967, s.4(a) (see Official sources section).

Who is considered an online seller?

According to official HASiL material, online (digital economy) business includes:

• Online sellers and e-Commerce;
• e-Hailing (e.g. on-demand public vehicle drivers);
• Influencers / instafamous;
• Freelancers online;
• Personal shoppers.

All these categories carry on a business and the income generated is business income that must be reported.

Source: HASiL — Introduction to Individual Income Tax; HASiL — Slide Tax Obligations of Individuals (Business) T2025 (see Official sources section).

Obligations of digital traders

According to the HASiL — Digital Business page, every digital trader must:

• Register a Tax Identification Number (TIN) via e-Daftar;
• Report all income, including income from digital business;
• For partnerships: file Form e-P via e-Filing (responsibility of the principal partner);
• Make payments via ByrHASiL;
• Keep the records required.

Source: HASiL — Digital Business (see Official sources section).

Reporting — Form B and Form e-P

Business income is reported in return forms:

Form	For whom
B	Residents carrying on a business (whether online or physical)
e-P	Partnerships (filed by the principal partner)

Online sellers who also receive other income must report all income. Keep bank statements and financial records.

Source: HASiL — Digital Business (see Official sources section).

Online sales — taxable in Malaysia

Online sales are subject to tax in Malaysia, regardless of whether the buyer is from Malaysia or outside Malaysia.

Source: HASiL — Slide Tax Obligations of Individuals (Business) T2025 (see Official sources section).

Deductible expenses

Expenses are allowed as deductions if they are:

• incurred wholly and exclusively in producing the income; and
• within the relevant basis period of accounting.

Keep records for at least 7 years.

Source: HASiL — Slide Tax Obligations of Individuals (Business) T2025 (see Official sources section).

Instalment payments (CP500)

Traders with business income may need to make CP500 instalment payments and pay via ByrHASiL.

Source: HASiL — Slide Tax Obligations of Individuals (Business) T2025 (see Official sources section).

Penalties for late filing or payment

Late or failed submission of return forms and payment of tax may attract penalties.

Source: HASiL — Slide Tax Obligations of Individuals (Business) T2025 (see Official sources section).

Influencers: self-employed vs employee

It is important to distinguish status:

• Influencers working under an employment contract — income may be chargeable as employment income (s.13);
• Self-employed influencers carrying on a business — income is business income (s.4(a)).

Do not equate "digital business" with "employment income" — the status depends on the actual circumstances.

Source: HASiL — Introduction to Individual Income Tax; HASiL — Slide Tax Obligations of Individuals (Business) T2025 (see Official sources section).

Simple example

Nadia sells handicrafts through an e-Commerce platform. Her income from online sales is business income under s.4(a). Nadia registers a TIN via e-Daftar, keeps records of her sales and expenses, and reports her business income in Form B. She deducts expenses incurred wholly and exclusively in producing the income, and makes CP500 instalment payments.

Aiman works full-time as a company employee and also runs a small online business in his spare time. His employment income is reported as employment, while his online business income is reported in Form B — not Form BE, because he carries on a business.

(Illustrative example to show the concept — not specific tax advice.)

Frequently Asked Questions (FAQ)

Q. I sell online — is it taxable? A. Profits from a business (including online) are chargeable income under s.4(a) ITA 1967. Online sales are taxable in Malaysia regardless of whether the buyer is domestic or foreign.

Q. Are influencers taxable? A. Yes, if the income is business or employment income. The distinction depends on whether the influencer works under an employment contract or carries on a business independently.

Q. Do I need to register a TIN? A. Digital traders must register a TIN via e-Daftar. A specific registration threshold (if any) is unverified in this review this item still awaits official confirmation from HASiL — check again with HASiL before deciding. — verify with HASiL.

Q. Which form do I use? A. Form B for business; Form e-P for partnerships (filed by the principal partner). Refer to HASiL for your specific situation.

Q. What expenses can I deduct? A. Expenses incurred wholly and exclusively in producing the income, within the basis period of accounting.

Q. What if I file late? A. Penalties may apply; specific rates are unverified in this draft this item still awaits official confirmation from HASiL — check again with HASiL before deciding.

Glossary

• ITA 1967 — Income Tax Act 1967 (Act 53).
• s.4(a) — the provision that makes business gains/profits chargeable income.
• TIN — Tax Identification Number.
• e-Daftar — HASiL's tax registration system.
• Form B — return form for residents with business income.
• Form e-P — partnership return form via e-Filing.
• CP500 — tax instalment payments for business.
• ByrHASiL — HASiL's tax payment channel.
• e-Hailing — on-demand vehicle services.
• Freelancer — a self-employed worker.