Recently I have decided to monetize my blogs to help support the cost of the hosting fees. Many Malaysians do monetize the blogs or sites that they set up whether it is via self-hosted or a free blogging platform like Blogspot or Typepad.
I made a call to LHDN (Lembaga Hasil Dalam Negeri/the Malaysia income tax) as I am not able to obtain any advise as many friends are not familiar with the process. Some said to register as a sole prop and others ask me to just keep quiet and collect the income. But generally, my circle of friends are not familiar with online blogging and websites.
During the call, a friendly officer from LHDN first asked me about my objective of the online. I informed her that due to rising costs, it is hard to afford the cost of running the website. She informed me that it is not necessarily to register as a sole prop if I am not operating as a full business. As my blog is mainly content based and I am not selling anything online, the following year, I would need to fill up the form B to declare my income from Business (Pendapatan daripada perniagaan). She said that I can further deduct certain costs like my internet bills, hosting fees or other expenses. She stressed that it is important to keep records to justify the deductions.
Even though in the end the income is not taxable, it is still compulsory for Malaysians to declare their income to LDHN. When we collect Google Adsense, I believe reports would be sent to LHDN to comply with regulations and if we do not declare, it would violate the terms and we would be fined by Income Tax.
If you are just monetizing the blogs to earn some extra pocket money or to cover fees to finance your hobby, it is not worth if you do not declare and risk being fined. I have read in a forum that someone who collected Adsense via a local bank was issued a letter by LHDN as he was caught earning income from online.
If your online site is earning a lot or you are selling goods and services, seek professional advise on how to keep the records. It is not worth to operate without notification as it would result in fines and penalties should you be found out.
Should you require further clarification, do call and seek advise from LHDN directly via their customer service hotline.