Proposed Increase in Service Tax Rate – Transitional Rules

Further to our Tax Whiz dated 15 January 2024 on the proposed increase in Service Tax Rate and Expansion of Taxable Services, the Royal Malaysian Customs Department (“RMCD”) conducted a handholding session on 22 January 2024.

Based on the latest handholding session by RMCD, we set out below, some of the additional salient points.  Please note that these policies/ points by RMCD remains to be drafts/ proposals and are still under review by the Minister of Finance. 

Transitional rules for the proposed increase in Service Tax rate

Please click on the above header link for a summary of the proposed transitional rules.

Proposed expansion of the scope of Service Tax

1.     Group J: Logistics

Taxable person: Any person who provides logistic services

Taxable services: Include warehousing management, courier*, goods delivery, goods delivery by e-platform and customs agent*

Note*: Customs agent (Item 3 of Group I) and courier (Item 6 of Group I) will be combined into Logistics (Group J)

2.     Item 13 Group G: Repair and maintenance services (newly proposed in January 2024)

Note that the handholding session presented by RMCD is still a proposal and are still under review by the Minister of Finance. We would advise affected businesses to continuously monitor the developments and assess the impact to their business operations, particularly when the proposed effective date is fast approaching. 

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