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Tax Alert 17 January 2020

Welcome to Tax Alert, Grant Thornton Malaysia’s newsletter on the latest tax updates and information.

The Royal Malaysian Customs Department has recently released six Service Tax Policies setting out the amendments and approaches in relation to service tax matters with effect from 1 January 2020. The following are among others announced in the Service Tax Policies:

  • Expansion of existing taxable services & new taxable services
    • Information technology services now include the distribution or resell of information technology services on behalf of any person.
    • Telecommunication services now include the provision of digital services.
    • Advertising services now include digital advertising services.
    • Online platforms or market places providing:
      • electronic medium that allows the suppliers to provide supplies to customers, and
      • digital services including provision of digital services on behalf of any person,

                are now taxable services.

  • Registration requirements are provided for those currently registered for service tax as well as those not registered.
  • Service tax registrants providing the following categories of services are exempted from self-recipient accounting for service tax for the same type of imported taxable services acquired:
    • legal
    • legal Islamic matters
    • accounting
    • surveying
    • engineering
    • architectural
    • consultancy
    • information technology
    • management
    • electronic medium/digital services
    • advertising
  • A local service tax registrant who has paid service tax on digital services to foreign service providers is allowed to claim a refund. The refund is to be claimed via an offsetting method (to be made in the SST-02 form) based on the actual amount paid to the foreign registered persons.
  • Local and foreign service providers who provide online distance learning services which qualify as digital services are not subject to service tax.
  • Local and foreign service providers who provide online newspapers, online journals and periodicals which are digital services are not subject to service tax.
  • Training or coaching services provided by registered/recognised training or coaching centres to a person who holds a valid Kad OKU are not subject to service tax.

* Conditions may be applicable