Malaysia: Service tax on imported services, policy updates
Malaysia: Service tax on imported services, updates
Malaysian authorities issued three “service tax policies” as guidance about measures to address the potential cascading effect of the service tax on imported services.
Service Tax Policy 7/2020 concerns accounting for service tax for persons otherwise exempt from paying service tax. Effective 1 January 2020, subject to certain conditions, those that are exempt from self-accounting for service tax on imported taxable services include:
- Any person that, in carrying on a business, acquires digital services from foreign registered person
- Any taxable person providing information technology services (ITS) having acquired those ITS from a person outside Malaysia
Service Tax Policy 8/2020 concerns group relief on providing taxable services to a company within the same group of companies. Effective 1 January 2020, the group relief facility may still be applicable with regard to taxable services provided to group members even if the same service is provided to a third party as long as the value provided to third parties does not exceed an amount equal to 5% of the total value of taxable services within a period of 12 months.
Service Tax Policy 9/2020 concerns the service tax treatment of taxable services under Group A: Accommodation (including hotels, inns, lodging houses, service apartments and other similar establishments that are exempted from charging service tax on taxable services provided from 1 March 2020 to 31 August 2020).
Read a March 2020 report prepared by the KPMG member firm in Malaysia
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