Service tax 2.0 was implemented with effect from 1 September 2018 to replace existing Goods an Services Tax (GST). It is a consumption tax levied and charged on any taxable services provided in Malaysia by a registered person in carrying on his business. The rate of service tax is 6%.

Service tax is also proposed to be charged on importation of prescribed services into Malaysia which include:

  • Architecture, graphic design, information technology and engineering design services acquired by businesses (w.e.f. 1 January 2019); and
  • Online services such as downloaded software, music, video or digital advertising acquired by consumer (w.e.f. 1 January 2020).

In respect of imported services, businesses must be aware of the impact of service tax and withholding tax as well. Unlike Sales Tax, Service Tax is levied based on payment basis, which means businesses only make service tax payment to Royal Malaysian Customs Department when payment is received.

Special treatment is also given to transactions involving Designated Areas (Labuan, Langkawi and Tioman) and Special Areas (Free Zones, Licensed Warehouses, Licensed Manufacturing Warehouses and Join Development Area).

We provide comprehensive service tax support which includes service tax exemption advisory, service tax training and service tax review program. Equip with deep tax technical expertise, our tax specialists are here to support you, delivering top notch tax consulting services in line with your highest expectations to drive your business forward.

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