Share with your friends

Revised Guide on Employment Services

The Royal Malaysian Customs Department (“RMCD”) has issued a revised Guide on Employment Services (as at 5 August 2019).  Please click on the above header link for a copy of the revised Guide at the MySST portal. 

Set out below are some of the clarifications provided in the revised Guide:-

  • “Secondment of employees”  means (amongst others):-
  1. the employee will remain employed by the original employer and the continuity of the employment remains continuous and unbroken.
  2. during the secondment period, the employee solely works for the seconded company.
  3. seconded company has the total control over the employee.
  • Secondment of staff is not a prescribed taxable service, hence the recovery of salary or emolument is not subject to Service Tax.  However, any additional fees, commission or markup is subject to Service Tax.
  • Examples of taxable employment services include services provided by an employment agency to job seekers and recruitment services to an employer.
  • Where the employment agency charges a fee of RM15,000 (i.e. RM10,000 for employment services and RM5,000 as an advance salary for the first month), Service Tax is chargeable on the total value of RM15,000*.
    *based on the previous Guide (as at 25 August 2018), only RM10,000 is subject to Service Tax.

Although the revised Guide provides more clarity on what constitutes “secondment of employees” for Service Tax purpose, there remains some uncertainty on how extensive is taxable employment services. 

The revised Guide states that all types of employment services are subject to Service Tax and sets out a list which is noted to be not exhaustive.  On the other hand, there is also a list of non-taxable employment services but the exclusion is limited to 3 categories.  It appears that a company normally not in the business of providing employment services similar to an employment agency, but shares its employees with other companies could be caught under the wide definition of employment services.  

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Contact KPMG

For more information on our core service offerings, please contact:

Petaling Jaya Office

Tai Lai Kok
Executive Director –
Head of Tax and Head of Corporate Tax
+ 603 7721 7020

Long Yen Ping
Executive Director –
Head of Global Mobility Services
+ 603 7721 7018

Bob Kee
Executive Director –
Head of Transfer Pricing
+ 603 7721 7029

Ng Sue Lynn
Executive Director –
Head of Indirect Tax
+ 603 7721 7271

Soh Lian Seng
Executive Director –
Head of Tax Risk Management
+ 603 7721 7019

Nicholas Crist
Executive Director –
Corporate Tax
+ 603 7721 7022

Dato’ Leanne Koh
Executive Director – 
Corporate Tax
+ 603 7721 7026

Neoh Beng Guan
Executive Director – 
Corporate Tax
+ 603 7721 7025

Ong Guan Heng
Executive Director – 
Corporate Tax
+ 603 7721 7027

Chang Mei Seen
Executive Director – 
Transfer Pricing
+ 603 7721 7028

Ivan Goh
Executive Director – 
Transfer Pricing
+ 603 7721 7012




Evelyn Lee 
Executive Director –
Penang Tax
+604 238 2288 (ext. 312)

Regina Lau
Executive Director –
Kuching & Miri Tax
+6082 268 308 (ext. 2188)

Titus Tseu
Executive Director –
Kota Kinabalu Tax
+6088 363 020 (ext. 2822)

Ng Fie Lih
Executive Director –
Johor Bahru Tax
+607 266 2213 (ext. 2514)

Crystal Chuah Yoke Chin
Tax Manager –
Ipoh Tax
+605 253 1188 (ext. 320)