Service Tax (Amendment) Act 2019
The Service Tax Act 2018 has been amended and gazetted on 9 July 2019 to align with the Finance Bill issued in Budget 2019.
Amendments
| Section | Details |
|---|---|
| Section 2 |
* Pangkor is specifically defined to include “Pangkor Island, Mentagor Island, Giam Island, Simpan Island, Tukun Terindak Island, Pelanduk Island, Anak Pelanduk Island, Landak Island, Batu Orang Tua and Batu Jambal”. |
| Section 9 | The scope has broaden to include taxable service which is provided by a taxable person and payment for such service is made to any machine or device operated by coins, tokens or similar nature. |
| Section 11 |
Director General of Royal Malaysian Customs Department (“RMCD”) now allows registered person to make an application in writing to request service tax to be accounted on accrual basis, i.e. due at the time invoice is issued. In respect of service for whole or any part of the payment not received which will be due on the day following that period of 12 months, it was amended that such period shall refer to the date for which service is provided instead of the date when invoice is issued. |
New Sections
| Section | Details |
|---|---|
| Section 1A |
The service tax act has broaden to include any person of whatever nationality or citizenship, both within and outside Malaysia. |
| Section 27A | The Director General is empowered to utilize any refund or drawback to offset against any outstanding amount of sales tax, service tax, GST, customs duty, excise duty and relevant penalties due to the RMCD. |
| Section 69A |
Notwithstanding section 283 and 284 of the Criminal Procedure Code, the period of imprisonment imposed by any court in relation to non-payment of any fine under Service Tax Act 2018 shall be capped as follows: –
With 2 additional months for every RM10,000 after the first RM20,000 of the fine. |
| Part IXA |
Service Tax Act is amended by inserting a section in respect of imposition of service tax on digital services. Detail of digital service is explained as below:- |
Digital Services
Effective 1 January 2020, service tax 6% shall be charged and levied on any digital service provided by a foreign registered person to any consumer in Malaysia. Whereas taxable services acquired by businesses in Malaysia from foreign service provider falls under the scope of imported taxable services effective from 1 January 2019. The businesses have to account and pay for service tax on imported taxable services.
| Definition of Digital Service | Digital Service means any service that is delivered or subscribed over the internet or other electronic network and which cannot be obtained without the use of information technology and where the delivery of the service is essentially automated. |
| Threshold of Registration |
Foreign service provider is mandatory to be registered when the total value of digital services provided to a consumer in Malaysia exceeds RM500,000 per year. In respect of consumer, it means any person who fulfils:
Foreign service provider has to complete DST-01 form via online through http://dst.customs.gov.my |
| Services Considered as Digital Service |
These services include:-
|
| Taxable Period | The taxable period shall be a period of three months (quarterly) ending on the last day of any month of any calendar year. Service tax is due at the time when payment is received. However, accrual basis is allowed upon application in writing. |
