Amendment to Service Tax Policy 2/2021 Amendment to Service Tax Policy 2/2021 Amendment to Service Tax Policy 2/2021

Further to our Tax Whiz on 30 June 2021, the Royal Malaysian Customs Department ("RMCD") has issued the Amendment to Service Tax Policy 2/2021 in respect of Service Tax exemption on the provision of accommodation services. Please click on the above header link for a copy of the Amendment (available in Malay language only).

The Amendment reiterates that the Service Tax exemption for the extended period from 1 July 2021 to 31 December 2021 is limited to the provision of accommodation premises (including breakfast where it is part of the package). Other services as prescribed under Group A, First Schedule of the Service Tax Regulations 2018 remain taxable. 

Set out below is a summary of the Amendment:-

• Accommodation package with breakfast included is exempted from Service Tax as this is a common industry practice, however ‘add ons’ for kids breakfast, lunch and dinner shall be subject to Service Tax.
• Accommodation package with breakfast, lunch and dinner included which cannot be itemised in the invoice shall be subject to Service Tax.
• Seminar package with accommodation and food included which cannot be itemised in the invoice shall be subject to Service Tax.
• The provision of food at the accommodation premise which served as a quarantine centre shall be subject to Service Tax; only the provision of accommodation is exempted from Service Tax.
• Rental of hall or space within the accommodation premise shall be subject to Service Tax.
• The provision or sale of tobacco products as well as alcoholic and non-alcoholic beverages shall be subject to Service Tax

Our highlights are intended to provide a general overview of the key proposed tax changes and should not be used or relied upon as a substitute for detailed advice or as a basis for formulating business decisions.

Should you have any questions or require further clarification, please do not hesitate to email or contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization.