Malaysia's Indirect Tax - What's new

The following bills have been passed in Parliament: 

• Tourism Tax (Amendment) Bill
• Service Tax (Amendment) Bill
• Sales Tax (Amendment) Bill
• Customs (Amendment) Bill
• Free Zones (Amendment) Bill
• Excise (Amendment) Bill

The Tourism Tax (Amendment) Bill  seeks to make the following changes:

• Tourism tax will be levied on accommodation premises made available through online booking.
• The tourism tax shall be collected from a tourist by the digital platform service provider who made the accommodation premises available through online booking, and pay this tax to the Director-General.

The Service Tax (Amendment) Bill seeks to clarify:

• That any registered person who ceases to carry on the business of providing any taxable service should notify the Director-General in writing within 30 days from the date of cessation. 
• The Director-General will refund any balance in the amount of the refund after a registered person has made a deduction.

The Sales Tax (Amendment) Bill seeks to: 

• Empower the Director-General to direct any registered manufacturer to deduct the amount of refund from the amount of sales tax to be paid from the return. 
• Empower the Director-General to withhold any amount of refund to be credited to any following or subsequent taxable period.
• Empower a proper officer of sales tax to seal goods that cannot be removed due to their nature, size or quantity.
• Provides creditability of an agent provocateur's evidence. 

These bills: Customs (Amendment) Bill, Free Zones (Amendment) Bill and Excise (Amendment) Bill

• Empowers a senior officer of  customs in relation to enforcement, investigation and inspection.
• States that the evidence of an agent provocateur is admissible.
• States that under the Customs and Excise (Amendment) Bill, the Director-General may authorise nine-tenths of the paid duties to be repaid as a tax return if the goods are re-exported after the duty has been paid.

(Note: For further information about our Sales and Service Tax (SST) subscription, contact us at my-sales@wolterskluwer.com (Malaysia).

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Sales and Service Tax (SST) Updates

The Royal Malaysian customs department issued two new guides/schemes on its web recently:-

• Approved Major Exporter Scheme (AMES)
• Guide on Transmission and Distribution of Electricity Services. 

Approved Major Exporter Scheme (AMES)

This scheme was released under the Sales Tax (Amendment) Regulations 2020 and came into operation on 1 July 2020. The amendment contains a new part, IX A (AMES) which details out the following:-

• Application for Approval
• Validity for Approval
• Exemption from Payment of Sales Tax 
• Goods not eligible for Exemption from Payment of Sales Tax 
• Variations, Suspension and Revocation of Approval
• Sales Tax Due and Payable

Guide on Transmission and Distribution of Electricity Services

This guide was published to help taxpayers in understanding the service tax treatment on the provision of electricity services. This guide contains the following details:-

• Service Tax Treatment on the Provision of Electricity Services
• Treatment of Service Tax Electricity Services in Designated Area and Special Area 
• Registration and Responsibilities of a Registered Person
• Frequently Asked Questions

Lochana Nanthacumar

Content Management Analyst

Wolters Kluwer Malaysia

(Note: For further information about our Sales and Service Tax (SST) subscription, contact us at my-sales@wolterskluwer.com (Malaysia).

Taxation On Digital Services

This article is written by Lee Hishamuddin and Gledhill (LHAG) and was first published in their SST e-Alert in October 2019. Reproduced with permission from LHAG.

Effective from January 2020, there will be a 6% of service tax imposed on digital services in Malaysia  for both local and foreign service providers in order to comply with Malaysia's new Sales and Service tax. The Royal Malaysian Customs Department (Customs) recently issued a Guide on Digital Service Tax (Guide) to assist FSPs. This alert highlights some of the key points that FSPs should consider in assessing their liability prior to the implementation.The service tax is also applicable to online platforms that carry out transactions on behalf of overseas service providers but do issue invoice or any other document under their name.

Recent Updates On Service Tax

This article is written by Lee Hishamuddin and Gledhill (LHAG) and was first published in their SST e-Alert in September 2019. Reproduced with permission from LHAG.

 Three subsidiary legislation related to service tax came into effect on 1.9.2019 which are:-

a) Service Tax (Amendment) Regulations 2019.
b) Service Tax (Imposition of Tax for Taxable Service in respect of Designated    areas and Special Cases) (Amendment) Order 2019.
c) Service Tax (Compounding of offences) (Amendment) Regulation 2019.

The above regulations and order is aim to provide further explanation to the current law by pointing out some of the existing legal gaps.