Malaysia: Service tax guidance concerning food and beverages, motor vehicles, brokerage services

Guides regarding the service tax treatment of food and beverages, motor vehicles, parking services, and brokerage services

Service tax guidance concerning food and beverages, motor vehicles

The tax authority in late December 2021 issued updated guides regarding the service tax treatment of food and beverages, motor vehicle repairs, and parking services.

The guidance is provided in a “question and answer” (Q&A) format and includes updates regarding the service tax treatment of food and beverages, as follows:

  • Q&A 13 – Rental of space is not subject to service tax (in line with October 2018 amendments to the service tax regulations).
  • Q&A 24 – Food and beverages provided gratis to staff by a food and beverage operator are not subject to service tax.
  • Q&A 26 – Food sold at a petrol station’s kiosk when prepared by the staff is not subject to service tax because the entity is not a food preparation establishment having the characteristics of a restaurant.
  • Q&A 31 – Food or beverages from self-service vending machines located in food and beverage establishments that are not owned or operated by a registered entity are not subject to service tax.

Regarding motor vehicle repairs or parking:

  • Q&A 11 – A company that has been granted by a local authority a right to operate and maintain parking spaces is subject to service tax.

In the other guide, the classification of motor vehicles is addressed.

Read a January 2022 report prepared by the KPMG member firm in Malaysia

Service tax exemption for certain brokerage services, tourism

The tax authority issued Service Tax Policy 3/2021 (31 December 2021) that notes the exemption from service for brokerage services related to the trading of listed shares in Bursa Malaysia (but not other types of brokerage services including other types of securities and derivatives). The exemption is effective 1 January 2022.

In addition, Tourism Tax Policy No. 2/2021 (27 December 2021) concerns the exemption from service tax with regard to foreign tourists staying in registered premises through 31 December 2022.

Read a January 2022 report prepared by the KPMG member firm in Malaysia

 

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