Service Tax Policies (“STPs”) and FAQs

1. STPs and FAQs in relation to the expansion of taxable services and change in Service Tax rate

Further to the expansion of taxable services and the change in Service Tax rate from 6% to 8%, the Royal Malaysian Customs Department (“RMCD”) has issued the following STPs dated 28 February 2024 and FAQs (only available in Malay language), and we have summarized the key highlights as follows:-

STP 1/2024 – Determination of the date of charging Service Tax on new taxable services

A. For existing Service Tax registered person who provides new taxable service and liable to add registration of such new taxable service in February 2024:

i) The new taxable service to be added between 26 February 2024 and 29 February 2024 (whilst it is not stated, it should mean to be added via the MySST portal)

ii) To charge Service Tax on the new taxable service from 1 March 2024

iii) Service Tax is exempted for new taxable service provided between 26 February 2024 and 29 February 2024

B. For person providing new taxable service and liable to be registered in February 2024 on the provision of new taxable service:

i) Application for Service Tax registration to be submitted between 1 March 2024 and 31 March 2024

ii) It follows that Service Tax will be charged on the new taxable service from 1 April 2024

iii) Service Tax is exempted for new taxable service provided between 26 February 2024 and 31 March 2024 

STP 3/2024 – Determination of Service Tax rate for the provision of various taxable services

In essence, the Service Tax rate should follow the respective taxable services provided.  Generally, taxable services would be subject to Service Tax at 8% with effect from 1 March 2024, except for food and beverages, telecommunication, parking and logistic services (at 6%).

In cases of package, the Service Tax rate should follow the rate applicable for the respective grouping of taxable services.

Please refer to the table set out in STP 3/2024 for different scenarios and the respective tax rates.

FAQs

The following FAQs have been issued:

- FAQ in relation to Budget 2024

- FAQ in relation to expansion of the scope of taxable services and change in Service Tax rate

The FAQs provide general overview/ understanding in relation to the change in Service Tax rate and the expansion of taxable services. 

2.  STP 2/2024 in relation to exemption for traditional and complementary medicine (“TCM”)

The STP 2/2024 issued by RMCD states amongst others, the following:

• Service Tax is exempted on the following services provided by TCM practitioners who are registered under the Traditional and Complementary Medicine Act 2016 [Act 775]:

- Malay Traditional Medicine

- Chinese Traditional Medicine

- Indian Traditional Medicine

- Homeopathy

- Chiropractic

- Osteopathy; and

- Islamic Medical Practices

• Exemption periods:

i) From 1 September 2018 to 29 February 2024, however,

- where Service Tax has been collected from the customer, it should be remitted to Customs accordingly.

- there is no refund on Service Tax remitted.

- where the practitioners are not registered or registered but did not collect Service Tax, a blanket remission of penalty applies.

ii) From 1 March 2024 until the Service Tax legislation is amended to cover the exemption

Please click on the above header links for copies of the STPs and FAQs. 

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