Amazon made headlines recently and yet again, by paying zero income tax for a the second year in a row, according to the Institute of Taxation and Economic Policy, despite being worth a whopping USD793 billion. How is this even possible?

Let’s look at the simplest explanation of how tax works. A company makes money, and in return, it needs to pay tax. Money in and money out. And that money is what the government uses to pay for public goods and services, in the interest of the general public. Without such money, the running of infrastructure projects and public institutions would not see the light of day. Without it, the civil service, the government staff cannot be paid. And without it, a country cannot run properly. In reality, the rich and powerful, the big conglomerates have elaborate ways to avoid or mitigate paying tax. In the US, tax credits and exemptions are legal and built into the US Federal Tax Code, and despite President Trump’s lambasting of Amazon’s zero tax, he puts new laws to reduce corporate tax rate from 35% to 21%. The problem with taxes is, there are still no established laws governing companies that offer digital products and services. Hence why the US only just regulated sales tax on e-commerce. This is the same as Malaysia as another case in hand. In Malaysia, foreign online travel agencies (OTAs) charge high commissions to hotels and resorts, only to be exempted for paying tax. Is this the right time to regulate the digital industries? Should the digital tax be implemented? Or are we still on the phase of nurturing new digital companies to capture the 5G frontier?

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