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Industry Guide:

Webhosting

 
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FREQUENTLY ASKED QUESTIONS

1. A company has two servers located at two different countries. One server is in Malaysia whereas the other is located overseas. The server’s contents are identical to each other where it stores web pages for the company’s web site. Where is the place of supply of web hosting service? 

Busy web sites typically employ two or more web servers to cater traffic. If one server starts to get swamped, requests are forwarded to another server with more capacity. This method is known as load balancing technique. If the location of servers is in more than one nation, then each server is treated independently. Each server will definitely have different web host. Thus, for GST purposes, the rule of where the supplier belongs is applicable in determining the place of supply for web hosting service. 

2. A web-host provides free hosting for its customer. What is the GST treatment?

Provision of services without consideration is not considered as supply in the GST system. Thus, the service is not subjected to GST. 

3. A web host charges certain amount to its client for opting out from its web hosting services before the contract expires. Does this charge subject to GST?

Fines, penalty charges or other sum levied as a consequence for contravention of terms of contract is not classified as payment for consideration. Thus the charge is not subject to GST.

4. A dedicated web hosting customer uses its server to publish three different web sites for companies within the group. Are all companies subjected to GST?

When a web hosting customers publish different web sites for companies within a group, GST is charged to the person that is billed for the dedicated web hosting service. 

5. If a dedicated web hosting customer uses its server to host web sites, what is the GST treatment?

This type of service normally provides by a reseller. A reseller is subject to GST registration if his supply exceeds the threshold limits.

6. A web hosting company also provides domain name registration services for its customer. What is the GST treatment for the registration services?  

When a web hosting company provides domain name registration services, the company is acting as an agent for a principal which is the registrar. With regards to GST treatment on agent, any supply by an agent on behalf of a principal is treated as supply by the principal. On the other hand, if the supply is provided through an agent acting in his own name, the supply is treated as a supply by the agent.
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L & Co Plt.

Johor
18A & 20, Jalan Sasa 2, Taman Gaya, 81800 Ulu Tiram, Johor, Malaysia.
Tel +607-859 0410
Fax +607-863 1003
Penang
S1-3, 1-21-01, Suntech @ Penang Cybercity (1575), Lintang Mayang Pasir 3, 11950 Bayan Baru, Penang, Malaysia
Tel +604-377 7075
Fax +604-619 2699
 
     

What Our Client Say

     
L & Co always carry their services in professional way – well planning, in time, precise, friendly and professional. While we are stuck with problems, they can always advice us with industrial best practices and their views.
 
YM Tan
ICT Automation (M) Sdn Bhd
www.ict.com.my
 
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