In this TaxLetter

-Updates on Service Tax:-

• Policy No. 1/2020
• Policy No. 2/2020
• Policy No. 3/2020
• Policy No. 4/2020
• Policy No. 5/2020
• Policy No. 6/2020

Service Tax Policy No 1/2020

Expansion of Scope of Taxable Service

Effective from 1 January 2020, Service Tax is expanded to include:-
i.Distributing or reselling of information technology services on behalf of any person;
ii.Provision of electronic medium that allows the suppliers to provide supplies to customers;
iii.Provision of digital services;
iv.Provision of digital telecommunication service; and
v.Provision of digital advertising service.

Service Tax Policy No 2/2020

Service Tax Exemption on Imported Taxable Service

Effective from 1 January 2020, certain taxable services (under Group G and Advertising Service under Group I) are granted exemption by Minister on imported taxable service, if:-
i.Incurred by registered person under Service Tax Act 2018 and account for service tax using SST-02;
ii.Provide same services to customer as imported taxable service acquired;
iii.Imported taxable service is for furtherance of business; and
iv.Has paid amount payable for the imported taxable service to service provider.
The value of imported taxable service that has been exempted do not need to be declared in item 18(c) of SST-02. Imported digital services acquired from foreign registered person are not entitled for the abovementioned exemption.

Service Tax Policy No 3/2020

Claiming a Refund by Offsetting Method on Service Tax on Imported Digital Service Provided by Foreign Registered Person

Effective from 1 January 2020, local service provider who has paid Service Tax to Foreign Service Provider on imported digital services is allowed to claim a refund by using the offsetting method, provided that local service provider:
i.Is a registered person under Service Tax Act 2018;
ii.Provides the same digital service as the imported digital service;
iii.Imported digital service must be for the furtherance of business;
iv.Imported digital service must be provided by a foreign registered person under Service Tax Act 2018; and
v.Payment of Service Tax has been made to foreign registered person.

Service Tax Policy No 4/2020

Service Tax on Online Distance Learning Services

Online distance learning services below are exempted from Service Tax:-

Local Service Provider:-

i.Preschool education under Education Act 1996;
ii.Primary and secondary education under the Education Act 1996; or
iii.Tertiary education including vocational education and professional trainings accredited by Malaysian Qualifications Agency (MQ) or under the National Skills Development Act 2006.

Foreign Service Provider:-

i.Preschool education;
ii.Primary and secondary education; or
iii.Tertiary education including vocational education and professional trainings
which is recognised by relevant authority in such country.

Service Tax Policy No 5/2020

Service Tax on Online Newspaper, Online Journals and Periodicals

Online newspaper, online journals and periodicals below are exempted from Service Tax:-
i.eNewspaper under tariff code 4902.10 and 4902.90.
ii.Online educational, technical, scientific, historical or culture journals and periodicals under tariff code 4902.90.10 00 and 4902.90.90 00.

Service Tax Policy No 6/2020

Service Tax on Provision of Training and Coaching Services for Disabled Person

Training service or coaching service provided to a person who holds a valid card OKU issued under the Persons with Disabilities Act 2008 is not subject to service tax, provided that the service provider is a training and teaching center which is-
i.Registered with Ministry of Health Malaysia;
ii.Registered with Social Welfare Department; or
iii.Recognised by an national association for persons with disabilities registered with the Registrar of Societies Malaysia.