Service Tax Policies on Logistic Services & Groups A to E

The Royal Malaysian Customs Department (“RMCD”) has issued the following Service Tax Policies dated 29 March 2024:

1. Service Tax Policy 4/2024 in relation to logistic services

2. Service Tax Policy 3/2024 (Amendment No. 1) in relation to Groups A to E

Please click on the above header link for copies of Service Tax Policies (only available in Malay language).

We have prepared a summary as follows:

1. Service Tax Policy 4/2024 in relation to logistic services

Service Tax Regulations 2018 (“SeTR”) – First Schedule, Group J Logistic Services

Taxable person under item (b) is combined with item (a).  Following this, item (b) is removed.

This only involves categorization and the prescribed taxable persons remain to be the same.

B2B Exemption under the Service Tax (Persons Exempted From Payment of Tax) Order 2018

The scope of the Business-to-business (“B2B”) exemption on Group J - logistic services is extended to cover the provision of services under the same item.

“Same item” refers to the following:

Item	Services
1(a)	Logistic services including all or part of the supply chain of logistic management services, warehousing or warehousing management services, freight forwarding services, port or airport services, shipping services, aviation services or cold chain facilities services, delivery, distribution or transportation of goods services
1(c)	Delivery, distribution or transportation of goods, documents or packages services through the E-Commerce platform including on behalf of any person
1(d)	Courier services licensed under section 10 of the Postal Services Act 2012 [Act 741]
2	Any person who is approved to act as a customs agent under subsection 90(2) of the Customs Act 1967 [Act 235]

Designated Areas and Special Areas

Amendment to be made on the Service Tax (Imposition of Tax for Taxable Service in respect of Designated Areas and Special Areas) Order 2018 where, logistic services (under Group J, First Schedule of the SeTR) provided within/ between designated areas and special areas are not subject to Service Tax, except for Customs agent services.

Services not subject to Service Tax as approved by the Minister of Finance

a. Door to door delivery services involving:

i) goods delivery services from a place outside Malaysia to a place within Malaysia or from a place within Malaysia to a place outside Malaysia without going through a third party

ii) goods delivery services by the same network service provider from the consignor to the recipient

iii) The goods delivered using the same airway bill/ bill of lading/ consignment note from the consignor to the recipient

iv) Single billing invoice – same invoice for the delivery charges from the consignor to the recipient

b. logistic services related to transit activities, i.e. goods arriving in Malaysia and then to another place outside Malaysia through land/ sea/ air transport mode

c. Ocean freight within Malaysia, i.e.:

- delivery of goods between Peninsular Malaysia and Sabah/ Sarawak/ Labuan

- delivery of goods within Sabah/ Sarawak/ Labuan

2. Service Tax Policy 3/2024 (Amendment No. 1) in relation to Groups A to E

Amongst others, it is clarified that:

Services	Service Tax Rate
Alcoholic drinks (including temperance drink)	8%
Non-alcoholic drinks in ready-to-drink form, bottles / packs / cans / boxes (or equivalent)	6%
Alcoholic drinks provided in a package (buffet/ banquet)	6%
Corkage fee	8%
Preparation or sale of snacks, fruits	Not taxable
Service charge	Not taxable

 

Please note that both the abovementioned Service Tax Policies take effect from 1 March 2024.  Where Service Tax has been collected from the customer earlier, it should be remitted to RMCD, and no refund of Service Tax is allowed.

Evelyn Lee
Partner - Penang Tax
evewflee@kpmg.com.my
+603 7721 2399

Crystal Chuah Yoke Chin
Associate Director - Ipoh Tax
ycchuah@kpmg.com.my
+603 7721 2714

Regina Lau
Partner - Kuching & Miri Tax
reglau@kpmg.com.my
+603 7721 2188

Titus Tseu
Executive Director - Kota Kinabalu Tax
titustseu@kpmg.com.my
+603 7721 2822

Ng Fie Lih
Partner - Johor Tax
flng@kpmg.com.my
+603 7721 2514