Malaysia: Service tax and disbursements vs. reimbursements

Malaysia: Service tax and disbursements, reimbursements

The Royal Malaysian Customs Department issued a guide to clarify the service tax treatment on disbursements versus reimbursements.


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For these purposes, a disbursement means the recovery of a payment made on behalf of the customer by a claimant who is acting as an agent. A reimbursement means the recovery of an expense from the customer that a claimant incurs as a principal from another party.

There are certain criteria to satisfy for a payment to be classified as a disbursement. The recovery of expenses with a mark-up cannot qualify as a disbursement, but only the mark-up will be subject to services tax if the invoice from the supplier is attached to the claimant’s invoice to its customer and the disbursement portion is separately itemized in the claimant’s invoice.

For reimbursement purposes, when the recovery of expenses forms part of the overall price that was charged by the claimant to the customer, the service tax treatment will generally follow that of the primary service.

Read a September 2020 report [PDF 1.48 MB] prepared by the KPMG member firm in Malaysia

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