Effective 1 September 2018, the Sales Tax Act 2018 and the Service Tax Act 2018 ("the Act"), together with its respective subsidiary legislations, are introduced to replace the Goods and Service (GST) Act 2014.
Service tax is a tax charged on:-
any provision of taxable services as stated in the First Schedule (Regulation 3) of Service Tax Regulations 2018;
made in the course or furtherance of any business;
by a taxable person and in Malaysia.
Service Tax is not charged on imported and exported services.
The tax rate is ad valorem tax at 6% and specific tax rates of RM25 per year per credit card or charge card.
Taxable Person
A taxable person is a person who provides taxable services in the course or furtherance of business in Malaysia and is liable to be registered or registered under the Service Tax Act 2018.
Taxable Service
A full list of proposed taxable services:
Group A - Accommodation
Provision of accommodation premises
Other services within the accommodation premises
Sale of tobacco products and beverages
Group B - Food and Beverages
Provision of prepared or served food and drinks
Other services within the establishment (excluding rental of space)
Sale of beverages
Group C - Night Clubs, Dance Halls, Cabarets, Health and Wellness Centres, Massage Parlours, Public Houses and Beer Houses
Provision of all services within the establishment
Sale of tobacco products and beverages
Group D - Private Clubs
Provision of all services within the private club
Sale of tobacco products and beverages
Group E - Golf Club and Golf Driving Range
Provision of golf club or golf driving range or services relating to golf or golf driving range
Provision of any other services within the golf club or golf driving range
Provision or sale of food, tobacco products and beverages
Group F - Betting and Gaming
Betting and gaming services involving bettings, sweepstakes, lotteries, gaming machines or games of chance
Conducting betting and gaming tournaments
Conducting card games
Group G - Professionals
Legal services (including Islamic legal services)
Accounting, auditing, book keeping, consultancy
Surveying services, including valuation, appraisal and estate agency
Engineering consultancy
Architectural services
Consultancy services (including training and coaching services)
Information technology services
Management services
Employment services (excluding secondment)
Provision of guards or protection
Digital services (including digital marketplace platform services)
Group H - Credit Card and Charge Card
Provision of credit card and charge card services
Group I - Others
Insurance services (excluding life or medical insurance to individuals)
Telecommunication services
Subscription broadcasting services
Services for clearing of goods from customs control
Provision of parking spaces where charges are imposed
Servicing and repair of motor vehicles
Courier delivery services for documents or parcels not exceeding 30kg
Hire and drive/hire car services, charter bus services and excursion bus services
Advertising services
Provision of electricity in excess of 600kwh per 28-day cycle to a domestic user
Local air travel
Brokerage and underwriting relating to financial services
Cleaning services concerning goods, land or commercial or industrial buildings
Value of Taxable Services
The value of taxable services is the total value of taxable services provided, which excludes the amount of service tax.
The taxable service groups under the Act are divided into two categories:
the first category, A to F (Appendix I), is where the service includes the Provision of all services;
the second category, G to I (Appendix I), does not include the Provision of all services
However, there is no value of taxable services prescribed for the registration of forwarding agents and the issuance of credit card and charge card services.
Service Tax Registration
Any person who provides taxable services in the course of furtherance of business in Malaysia for a period of 12 months and exceeds the value of taxable services is liable to be registered under the Service Tax Act 2018.
Any person providing taxable services below the value of taxable services is not liable to be registered but may apply for voluntary registration.
To determine the liability for a service provider registration, the value of taxable services for a period within12 months shall be calculated by using the following method:
1. Historical method
The total value of taxable service in any month and the 11 months immediately preceding that month.
2. Future method
The total value of taxable service in any month and the expected value of taxable service of 11 months immediately succeeding that month
Flow Chart 1: For Person, Who Provides Taxable Services
Responsibilities of the Registered Person
Responsibilities of the registered person include:
Charge service tax on their taxable service
Issue invoices in the national language or English language.
Submit SST-02 returns and payment.
Keep adequate records for a period of seven (7) years from the latest date to which the records relate.
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