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The MOF has issued a Media Release on 30 December 2019 in respect of the Service Tax implications on imported services.  Please click on the above header link for a copy of the Media Release.

At present, businesses are required to self-account for 6% Service Tax on imported taxable services.  Effective 1 January 2020, digital services provided by foreign service providers (registered) will be subject to 6% Service Tax. 

Based on the Media Release, the following measures have been put in place by the Government to address the potential Service Tax cascading effect and price hike issues:-

i)      “Group relief” facility is extended to qualifying imported taxable services acquired from foreign service providers within the same group of companies;

ii)     Businesses are exempted from accounting for Service Tax on imported professional services and advertising services, provided such imported services are the same as the services provided by the recipient company;

iii)    Local service providers who have paid Service Tax to foreign service providers on digital services may make a claim for refund from the Royal Malaysian Customs Department (“Customs”);

iv)    Distance learning services for preschool, primary and secondary education and tertiary education including vocational and professional training provided online, whether by local or overseas service providers are not categorized as a taxable service and not subject to Service Tax; and

v)     Online services such as e-newspaper and reading materials relating to educational, technical, scientific, historical or cultural journal or periodical are not categorized as a taxable service and not subject to Service Tax.

It is expected that further details on some of the above such as the effective date as well as conditions to qualify for exemption or refund will be made available soon.

Meanwhile, it was reiterated in the Media Release that Service Tax on digital services are chargeable on services and not goods to provide a level playing field for both local and overseas service providers. 

Customs will conduct roadshows relating to the implementation of Service Tax on digital services.  Further details can also be obtained from mysst.customs.gov.my.

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

Should you have any questions or require further clarification, please do not hesitate to 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 organisation at the following telephone numbers for respective offices:

Petaling Jaya Office

Tai Lai Kok
Executive Director –
Head of Tax and Head of Corporate Tax
ltai1@kpmg.com.my
+ 603 7721 7020

Long Yen Ping
Executive Director –
Head of Global Mobility Services yenpinglong@kpmg.com.my
+ 603 7721 7018

Bob Kee
Executive Director –
Head of Transfer Pricing
bkee@kpmg.com.my
+ 603 7721 7029

Ng Sue Lynn
Executive Director –
Head of Indirect Tax
suelynnng@kpmg.com.my
+ 603 7721 7271

Soh Lian Seng
Executive Director –
Head of Tax Risk Management
lsoh@kpmg.com.my
+ 603 7721 7019

Nicholas Crist
Executive Director –
Corporate Tax
nicholascrist@kpmg.com.my
+ 603 7721 7022

Dato’ Leanne Koh
Executive Director – 
Corporate Tax
leannekoh@kpmg.com.my
+ 603 7721 7026

Neoh Beng Guan
Executive Director – 
Corporate Tax
bneoh@kpmg.com.my
+ 603 7721 7025

Ong Guan Heng
Executive Director – 
Corporate Tax
guanhengong@kpmg.com.my
+ 603 7721 7027

Chang Mei Seen
Executive Director – 
Transfer Pricing
meiseenchang@kpmg.com.my
+ 603 7721 7028

Ivan Goh
Executive Director – 
Transfer Pricing
ivangoh@kpmg.com.my
+ 603 7721 7012

 

 

 

Evelyn Lee 
Executive Director –
Penang Tax
evewflee@kpmg.com.my
+604 238 2288 (ext. 312)

Regina Lau
Executive Director –
Kuching & Miri Tax
reglau@kpmg.com.my
+6082 268 308 (ext. 2188)

Titus Tseu
Executive Director –
Kota Kinabalu Tax
titustseu@kpmg.com.my
+6088 363 020 (ext. 2822)

Ng Fie Lih
Executive Director –
Johor Bahru Tax
flng@kpmg.com.my
+607 266 2213 (ext. 2514)

Crystal Chuah Yoke Chin
Tax Manager –
Ipoh Tax
ycchuah@kpmg.com.my
+605 253 1188 (ext. 320)