Question 1

What is sales and service tax (SST) in Malaysia?

Accepted Answer

Sales and Service Tax (SST) in Malaysia is a key indirect tax system regulated by the Royal Malaysian Customs Department (RMCD). SST is divided into two components: Sales Tax, which is levied on taxable goods that are manufactured locally or imported into Malaysia, and Service Tax, which is applied to prescribed taxable services provided within Malaysia.

Implemented on 1 September 2018, SST replaced the Goods and Services Tax (GST) as part of Malaysia’s efforts to streamline the taxation system and reduce the burden on consumers and businesses. Businesses operating in Malaysia must comply with SST registration, collection, and reporting requirements to avoid penalties.

SST is an important aspect of Malaysian tax law, affecting sectors such as manufacturing, retail, hospitality, professional services, and imported goods. Understanding SST is essential for business owners, accountants, and taxpayers to ensure full compliance and optimize tax management in Malaysia.

Question 2

What is the difference between sales tax and service tax in Malaysia?

Accepted Answer

Difference Between Sales Tax and Service Tax in Malaysia

In Malaysia, Sales Tax and Service Tax are two components of the Sales and Service Tax (SST) system, each targeting different types of economic activities:

• Sales Tax Malaysia is imposed on taxable goods that are either manufactured locally or imported into Malaysia. This tax is generally paid by manufacturers and importers and is included in the price of goods sold to consumers.

• Service Tax Malaysia applies to prescribed taxable services, which include sectors such as food and beverages, professional services, logistics, digital services, and telecommunications. Businesses providing these services are responsible for collecting Service Tax from their customers and remitting it to the Royal Malaysian Customs Department (RMCD).

Understanding the difference between Sales Tax and Service Tax is crucial for business owners, accountants, and taxpayers to ensure proper SST compliance, avoid penalties, and manage tax obligations effectively.

Question 3

Who needs to register for SST in Malaysia?

Accepted Answer

In Malaysia, SST registration is mandatory for businesses whose annual taxable turnover exceeds the Sales and Service Tax (SST) registration threshold set by the Royal Malaysian Customs Department (RMCD). Businesses required to register include:

• Manufacturers producing taxable goods locally
 • Service providers offering prescribed taxable services in Malaysia
 • Foreign digital service providers supplying taxable digital services to Malaysian customers

Registering for SST ensures legal compliance, proper tax collection, and timely remittance of Sales Tax or Service Tax to the RMCD. Failure to register can result in penalties and fines under Malaysian tax law.

Proper understanding of SST registration requirements is essential for business owners, accountants, and e-commerce operators to avoid compliance issues and optimize tax management in Malaysia.

Question 4

What goods are subject to sales tax in Malaysia?

Accepted Answer

In Malaysia, Sales Tax applies to taxable goods that are manufactured locally by a registered manufacturer or imported into Malaysia for domestic consumption. Under the Sales Tax Order issued by the Royal Malaysian Customs Department (RMCD), any goods that are not specifically exempted in the Sales Tax (Goods Exempted From Sales Tax) Order are subject to Sales Tax.MySST+1(https://mysst.customs.gov.my/assets/document/FAQ%20Industry%20SST/Faq%20Sales%20Tax.html?utm_source=chatgpt.com)

Key points on goods subject to Sales Tax Malaysia:

• Taxable goods include all locally manufactured or imported products that are of a class or kind not exempted from tax under the applicable Sales Tax Orders.Customs Malaysia(https://www.customs.gov.my/en/ip/Pages/ip_st.aspx?utm_source=chatgpt.com)

• Sales Tax is a single‑stage indirect tax levied at the point of manufacture (for local goods) or at customs clearance (for imported goods).PwC(https://www.pwc.com/my/en/publications/mtb/sales-tax.html?utm_source=chatgpt.com)

• Taxable goods are classified under various Harmonized System (HS) tariff codes, and Sales Tax rates normally range from 5% to 10% or specific rates on certain categories (e.g., petroleum‑related products).RÖDL(https://www.roedl.com/en/insights/malaysia-expansion-scope-sales-service-tax/?utm_source=chatgpt.com)

Examples of taxable goods subject to Sales Tax Malaysia:

• General consumer goods manufactured in Malaysia, unless exempted

• Imported goods brought into Malaysia for local sale or use

• Low Value Goods (LVG) imported via e‑commerce platforms if sold at a price not exceeding RM500 (subject to specific LVG Sales Tax rules)lmc.com.my(https://www.lmc.com.my/sales-tax-on-low-value-goods-lvg/?utm_source=chatgpt.com)

• Consumer products not listed in the exemption order, such as non‑essential items like certain luxury goods or specialised equipment (as classified in current Sales Tax Order schedules)RÖDL(https://www.roedl.com/en/insights/malaysia-expansion-scope-sales-service-tax/?utm_source=chatgpt.com)

Goods not subject to Sales Tax are those expressly listed as exempt under the Sales Tax (Goods Exempted From Sales Tax) Order — which often includes basic necessities such as certain food commodities, essential medical items, books, and other designated exempt goods.RÖDL(https://www.roedl.com/en/insights/malaysia-expansion-scope-sales-service-tax/?utm_source=chatgpt.com)

Understanding the scope of taxable goods under Malaysia’s Sales Tax regime is crucial for business compliance, tax planning, and SST registration obligations for manufacturers, importers, and online sellers.

Question 5

What services are subject to service tax in Malaysia?

Accepted Answer

In Malaysia, service Tax is a consumption tax levied on prescribed taxable services provided in Malaysia by a registered service provider (taxable person). Service Tax is charged on services that are explicitly listed under the Service Tax Regulations and includes both domestic services and imported digital services provided to Malaysian consumers.

1. Hospitality and Accommodation Services
 • Hotel and lodging services including inns, serviced apartments and homestays.
 • Accommodation premises and related hospitality services. PwC(https://www.pwc.com/my/en/publications/mtb/service-tax.html?utm_source=chatgpt.com)

2. Food and Beverage Services
 • Restaurants, cafés, bars and food outlets providing dine‑in or takeaway dining services. PwC(https://www.pwc.com/my/en/publications/mtb/service-tax.html?utm_source=chatgpt.com)

3. Professional and Business Services
 • Professional services such as legal services (lawyers), accounting, auditing, architectural, engineering and consultancy services.
 • Business management, training, and corporate advisory services.
 • Information technology and digital platform services. PwC(https://www.pwc.com/my/en/publications/mtb/service-tax.html?utm_source=chatgpt.com)

4. Telecommunications and Digital Services
 • Telecommunication services such as mobile and internet services.
 • Digital services including streaming, software, online platforms and imported digital services supplied to Malaysian customers. PwC(https://www.pwc.com/my/en/publications/mtb/service-tax.html?utm_source=chatgpt.com)

5. Logistics, Parking and Transportation‑Related Services
 • Logistics, freight forwarding, and cargo handling.
 • Provision of parking space at commercial establishments. PwC(https://www.pwc.com/my/en/publications/mtb/service-tax.html?utm_source=chatgpt.com)

6. Financial and Insurance Services (Expanded Scope)
 • Fee‑based financial services including brokerage, insurance, takaful and similar financial service fees subject to certain conditions. Grant Thornton Malaysia(https://www.grantthornton.com.my/en/insights/Tax/revision-of-sales-tax-rates-and-expansion-of-scope-for-service-tax/?utm_source=chatgpt.com)

7. Rental, Leasing and Construction Services
 • Rental or leasing services for tangible assets (with specific exemptions for residential property and other qualifying exclusions).
 • Construction and building services, including certain contract work. Grant Thornton Malaysia(https://www.grantthornton.com.my/insights/Tax/revision-of-sales-tax-rates-and-expansion-of-scope-for-service-tax/?utm_source=chatgpt.com)

8. Healthcare and Education Services
 • Private healthcare services provided by licensed healthcare facilities (with exemptions for Malaysian citizens in specific cases).
 • Private education services for international students or institutions with fee thresholds. Grant Thornton Malaysia+1(https://www.grantthornton.com.my/en/insights/Tax/revision-of-sales-tax-rates-and-expansion-of-scope-for-service-tax/?utm_source=chatgpt.com)

9. Beauty, Wellness, and Personal Care Services
 • Beauty and wellness treatments, spa services, hairstyling, slimming, facial treatments and related services. Grant Thornton Malaysia(https://www.grantthornton.com.my/insights/Tax/revision-of-sales-tax-rates-and-expansion-of-scope-for-service-tax/?utm_source=chatgpt.com)

Question 6

Are there SST exemptions available in Malaysia?

Accepted Answer

Sales and Service Tax (SST) exemptions are available in Malaysia. The Royal Malaysian Customs Department (RMCD) provides exemptions for certain goods and services through official Sales Tax and Service Tax Exemption Orders.
Key points about SST exemptions:

• Goods Exempted from Sales Tax: Certain essential goods, basic necessities, and other specified products are exempt from Sales Tax Malaysia under the Sales Tax (Goods Exempted From Sales Tax) Order. This can include items like specific food products, medical supplies, and raw materials used in manufacturing.

• Services Exempted from Service Tax: Certain prescribed services may be exempted from Service Tax Malaysia under the Service Tax (Persons Exempted From Tax) Order, depending on the service type, recipient, or industry sector.

• Eligibility Criteria: Exemptions are subject to eligibility conditions, such as the type of business, type of goods or services, and compliance with RMCD regulations.

• Application Requirements: Businesses seeking SST exemptions must submit proper applications to RMCD and maintain documentation to demonstrate compliance and eligibility.

Understanding SST exemptions is essential for business owners, manufacturers, service providers, and taxpayers to optimize tax planning, avoid overpayment, and ensure full compliance with Malaysian tax laws.

Question 7

What happens if you exceed the SST threshold but do not register in Malaysia?

Accepted Answer

In Malaysia, any business whose annual taxable turnover exceeds the SST registration threshold is legally required to register with the Royal Malaysian Customs Department (RMCD). Failure to register can lead to serious consequences under Malaysian tax law.

Key consequences of not registering for SST when required:

1. Penalties and Fines:
    • RMCD may impose monetary penalties on businesses that fail to register for Sales Tax or Service Tax despite exceeding the threshold.
    • Penalties can be substantial, depending on the amount of uncollected or unpaid tax.

1. Interest on Unpaid SST:
    • Businesses may be liable to pay interest on any Sales Tax or Service Tax that should have been collected from customers.

1. Legal Enforcement:
    • Non-compliance can result in legal action, including prosecution under the Sales Tax Act 2018 or Service Tax Act 2018.
    • This can lead to additional fines or even criminal liability for business owners in severe cases.

1. Business Reputation Risk:
    • Failure to comply with SST obligations can damage a business’s credibility with customers, suppliers, and financial institutions.

To avoid penalties and legal complications, businesses that exceed the SST registration threshold must register promptly with RMCD, collect and remit SST on taxable goods or services, and maintain accurate SST records. Compliance ensures smooth operations and protects your business from unnecessary fines and legal issues.

Question 8

Can manufacturers apply for sales tax exemptions in Malaysia?

Accepted Answer

Manufacturers in Malaysia can apply for Sales Tax exemptions under certain conditions. The Royal Malaysian Customs Department (RMCD) allows registered manufacturers to request exemptions on specific taxable goods, subject to the Sales Tax (Goods Exempted From Sales Tax) Order.

Key points for manufacturers seeking Sales Tax exemptions:

• Eligibility: Manufacturers must be registered with RMCD for Sales Tax and produce goods that meet the criteria specified in the exemption orders.

• Scope of Exemption: Exemptions may apply to raw materials, components, machinery, or intermediate goods used in the production process, which are considered essential for manufacturing or export purposes.

• Application Process: Manufacturers must submit an application to RMCD, providing detailed documentation about the goods, production process, and intended use to demonstrate eligibility.

• Compliance: Approved manufacturers must maintain accurate records and reports to ensure compliance with RMCD regulations and to avoid penalties.

Applying for Sales Tax exemptions helps manufacturers reduce production costs, improve cash flow, and remain competitive in the Malaysian market while ensuring full SST compliance.

Question 9

Who must register for service tax in Malaysia?

Accepted Answer

Any person providing taxable services in Malaysia is liable to be registered for Service Tax if:

• They provide prescribed taxable services (as listed in the Service Tax Regulations), and
 • 
 • The total value of taxable services provided by them in any rolling 12‑month period exceeds the prescribed threshold applicable to their service category. MySST(https://mysst.customs.gov.my/About?utm_source=chatgpt.com)

Under the Service Tax Act and MySST portal guidelines:

• A person becomes liable to be registered at the earlier of the following:

(a) the end of any month where the total taxable services in that month and the preceding 11 months exceeds the prescribed threshold, or
(b) where it is reasonably expected that the total taxable services in that month and the next 11 months will exceed the threshold.

🧾 Thresholds for Mandatory Registration

Although MySST’s main guideline states that liability arises when the 12‑month taxable service value exceeds a threshold, the exact threshold values vary by service category (not explicit in MySST online page, but covered in official practice and industry regulations). Below are the commonly referenced thresholds based on current Malaysian SST rules:

📌 Standard Threshold (General Services)
✔️ RM500,000
 • Applicable to most taxable services (e.g., professional services, advertising, logistics, courier, IT services). Kaizen CPA(https://www.kaizencpa.com/Mobile/Knowledge/info/id/2001.html?utm_source=chatgpt.com)

📌 Higher Thresholds for Certain Service Categories
(These are recognised in official RMCD guidelines and explanatory guides referenced by MySST and Customs Regulation documents.)

✔️ RM1,000,000
 • Applies to certain services such as financial services, insurance/takaful services, and sometimes rental or leasing services (subject to conditions). Kaizen CPA+1(https://www.kaizencpa.com/Mobile/Knowledge/info/id/2001.html?utm_source=chatgpt.com)

✔️ RM1,500,000
 • Applies to some services such as food & beverage (F&B), private healthcare, and other specified segments. HL Khoo Group(https://www.hlkhoo.com.my/latestnews/nid/163157/?utm_source=chatgpt.com)

✔️ No Threshold (Compulsory Registration)
 • Some prescribed taxable services (e.g., provision of credit card/charge card services, private education, and similar categories) may require registration from commencement of business regardless of turnover

Question 10

What are my obligations after SST registration?

Accepted Answer

Registered businesses must charge SST, issue SST-compliant invoices, file SST returns bimonthly, and make SST payments through MySST.

Question 11

What is the service tax registration threshold for construction services in Malaysia?

Accepted Answer

The provision of any construction work services, including construction work services for residential buildings built on land designated or approved for mixed development by the local authority, is subject to service tax effective from 1 July 2025, under Group L, First Schedule, Service Tax Regulations 2018.

However, the provision of construction work services for residential buildings and public facilities related to such residential buildings is not subject to service tax.

In short, anyone who provides construction work services, excluding residential building construction and public areas related to that residential building and where the value of the service exceeds the threshold value of RM1,500,000, must apply for registration online via the link: www.mysst.customs.gov.my.

Question 12

What services are not subject to service tax under construction work services?

Accepted Answer

Construction work services for residential buildings and public facilities related to those residential buildings are not subject to service tax.

Question 13

Who is exempted from paying service tax under construction work services?

Accepted Answer

Those who are exempted from paying service tax under construction work services are the Federal Government, the State Governments and the Local Authorities.

Besides that, in accordance with the provisions stated in item 9 of the Service Tax (Persons Exempted from Payment of Tax) (Amendment) Order 2025, exemption from the payment of service tax for business-to-business (B2B) services is eligible to be granted if the following prescribed conditions are met:

(i) both the provider and recipient of the construction services are registered persons; 
(ii) the construction services are provided to a registered person;
(iii) both the provider and recipient of the construction services provide the same construction services as specified in the taxable services under Group L, First Schedule, PCP 2018; and
(iv)the exempted construction services are not for own consumption.

This exemption from service tax payment is specifically granted to recipients of construction services obtained from providers of construction services within the same category under Group L, First Schedule, PCP 2018

Question 14

I am a contractor providing full construction services for a residential building. Do I need to register?

Accepted Answer

No, you do not need to register because construction services for residential buildings are not taxable services.

Question 15

Are machinery and equipment rental services subject to Service Tax?

Accepted Answer

Machinery rental, equipment leasing, vehicle rental, and asset leasing services are taxable under Service Tax once annual taxable turnover exceeds RM500,000.

Question 16

What is the service tax registration threshold for rental services in Malaysia?

Accepted Answer

The effective date for the implementation of service tax on rental or leasing services is 1 July 2025. The tax rate for rental or leasing services is 8%

The service tax threshold for rental and leasing services is RM1,000,000 annual taxable turnover. Once this threshold is exceeded within a 12-month period, the service provider must register for Service Tax via MySST.

Question 17

What is the taxable rental and non taxable rental services examples?

Accepted Answer

Taxable Rental or Leasing Services example:

1. Providing rental or leasing services on commercial property.
2. Obtaining rental or leasing services from service providers outside Malaysia
3. Providing rental or leasing including maintenance or repair services and other services. 
4. Providing rental services for animals or plants. 
5. Providing rental or leasing services for a moveable asset located in Malaysia to customers outside Malaysia. 
6. Providing rental or leasing services for a moveable asset located in Malaysia.

The above example is limited and does not cover all rental or leasing services provided by a registered person to their customers that are subject to service tax.

Non Taxable Rental or Leasing Services example:

The following rental or leasing services are excluded from the scope of service tax:

i. Providing rental or leasing services for moveable asset located outside Malaysia

ii. Providing rental or leasing services for housing accommodations (terrace houses, bungalows, serviced apartments, flats, condominiums etc)

iii. Providing rental or leasing services between or within Special Areas or Designated Areas and between Special Areas and Designated Areas

iv. Providing financial lease services

v. Providing rental reading material services

Question 18

Is service tax applicable on deposits collected from tenants for rental services?

Accepted Answer

Deposits collected for security purposes and refundable are not subject to service tax. However, if the deposit is considered part of the payment for the service, it is subject to service tax.

Question 19

Who is exempted from paying service tax under rental or leasing services?

Accepted Answer

Effective 1 July 2025, service tax exemption is granted to taxable persons specified in column (1), Group K, of the First Schedule to the Service Tax Regulations 2018. This exemption is applicable if the conditions specified under column (4), Service Tax Order (Persons Exempted From Payment Of Tax) 2018 are met as follows:

i. Services exempted under Group K;
ii. The service recipient is a registered person under Group K; 
iii. The service provider is a registered person under Group K; 
iv. The exempted taxable service is the same taxable service provided by a registered person under Group K;
v. The exempted taxable service must be used for the purpose of sublet or sublease and not for personal consumption.

Besides that, service tax is exempted on rental or leasing services provided to the Federal Government, State Governments and Local Authorities.

Question 20

If I provide legal services for matters outside Malaysia but the billing is charged to a person in Malaysia. Do I have to charge service tax?

Accepted Answer

The provision of legal services in relation to matters outside Malaysia is not subject to service tax.

Question 21

What is the service tax treatment on the provision of legal services provided by a legal practitioner in Malaysia to a recipient in Designated Area (Langkawi, Tioman or Labuan)?

Accepted Answer

The provision of legal services by a registered person in Malaysia to a recipient in Designated Area is subject to service tax.

Question 22

What is the service tax treatment on the provision of legal services provided by a registered legal practitioner in the Designated Area to a recipient in Malaysia?

Accepted Answer

Legal services provided by a registered practitioner who resides in the Designated Area to a recipient in Malaysia is subject to service tax.

Question 23

When is the service tax due and payable for a legal practitioner who has received money/payment and deposited it into the client’s account or client’s trust account?

Accepted Answer

Service tax is not due yet because the money in the client’s account is not payment for the legal services.

Question 24

Are legal services provided within or between the Designated Areas subjected to service tax?

Accepted Answer

Legal services provided within or between the Designated Areas by a service provider whose principal place of business located in Designated Area is not subject to service tax.

Question 25

Where can I refer to the list of goods affected by the new sales tax rate change?

Accepted Answer

The new sales tax rate change takes effect on 1 July 2025.

The list of goods affected by the sales tax rate change is as follows: 
i. the rate of 5% and specific rates can be referred to under the Sales Tax (Rate of Tax) Order 2025. 
ii. the exempted goods can be referred to under the Sales Tax (Goods Exempted from Tax) Order 2025.

If the goods are not listed in either of the above orders, the tax rate on the goods is subject to 10%. Both orders can be accessed at the following link https://mysst.customs.gov.my/.

Question 26

How can I determine if my manufacturing activity meets the definition of manufacturing under the Sales Tax Act 2018?

Accepted Answer

Based on Section 3 of the Sales Tax Act 2018, the definition of manufacturing is the manual or mechanical transformation of organic or non-organic materials into a new product by altering the size, shape, composition, nature, or quality of those materials. It also includes the assembly of parts into machinery or other products, but does not include the assembly of machinery or equipment for construction purposes. For further inquiries, the company can refer to the Internal Tax Division in the respective state.

Question 27

Am I required to register as a registered manufacturer if the finished exempted goods are manufactured subject to the new sales tax rate from exempted goods to taxable goods at a rate of 5% or 10%?

Accepted Answer

The company is required to be registered under Section 13 of the Sales Tax Act 2018 if the total value of taxable goods sold exceeds the threshold amount of RM500,000 within a 12 months.

Question 28

How may I obtain verification as to whether the tariff code of the imported or manufactured goods is subject to a change in the applicable sales tax rate?

Accepted Answer

You may obtain confirmation of the tariff code from the Technical Services Division of the relevant State.

Once the tariff code has been confirmed, you can refer to the sales tax rate through the Sales Tax Order (Tax Rate) 2025 and the Sales Tax (Exempted Goods from Tax) Order 2025. The updated sales tax rate can be found under the Sales Tax (Tax Rate) Order 2025 on the MySST portal at https://mysst.customs.gov.my/. If the tariff code for the goods is not listed in the aforementioned orders, the sales tax rate applicable to those goods shall be 10%. Any further inquiries, please refer to the Domestic Tax Division at the relevant State.

Question 29

I am a newly registered manufacturer under the Sales Tax Act 2018. Am I entitled to any sales tax exemptions? What is the process for applying for a sales tax exemption?

Accepted Answer

As a registered manufacturer, you are eligible to purchase raw materials, components, packing and packaging materials, manufacturing aids, and cleanroom equipment exempt from sales tax. You may apply for a sales tax exemption under the Sales Tax (Persons Exempted from Payment of Tax) Order 2018, subject to the conditions outlined in the details and the order itself. Applications for the sales tax exemption certificate can be submitted online via the portal at https://mysst.customs.gov.my/.

The manual for applying for the sales tax exemption certificate is available for reference at https://mysst.customs.gov.my/AboutExemption

Question 30

What is the method for determining the threshold value for logistics services?

Accepted Answer

The method for determining the threshold value for logistics services is based on the value of taxable services for the current month and the following eleven months, totaling RM500,000. (future method)

Question 31

What services are not subject to service tax under logistics services?

Accepted Answer

The services that are not subject to service tax under logistics services are:
 (i) Delivery of goods from a place outside Malaysia to another place outside Malaysia;
(ii) Delivery of goods commencing from the last point of exit to a place outside Malaysia;
(iii) Delivery of goods from a place outside Malaysia to the first point of entry in Malaysia;
(iv) Delivery of food and beverages prepared by a taxable person under Group B.

Question 32

Are shipping penalty charges subject to service tax?

Accepted Answer

Penalty charges imposed as payment for logistics-related services provided by companies, such as changing port, switching the bill of lading (BL), and others, are subject to service tax.

Tax Treatment of Charges:

Question 33

What is meant by directly exported goods services that are exempt from service tax?

Accepted Answer

An exemption from the imposition of service tax is granted for goods delivery services that are directly exported from the last point of exit in Malaysia to a place outside Malaysia.

The last point of exit in Malaysia refers to the port / terminal / jetty / border exit point where the goods or containers are loaded for sea or air transport or released from customs control for land transport to a place outside Malaysia.

For the purpose of service tax exemption, charges that are not subject to service tax commence from the last point of exit in Malaysia to a place outside Malaysia.

Example
Kedai Electronic P (KEP) in Klang appoints a forwarding agent, Fact Forwarding (FF), to manage the delivery of electronic item to KEP’s customers in Thailand.

FF manages the transportation of the electronic item from KEP’s shop in Klang to West Port, Port Klang, customs clearance, and other related ancillary services until the electronic item is loaded onto the vessel for the final destination in Thailand.

Logistics management charges imposed by FF on KEP from Klang until the goods are loaded onto the vessel are subject to service tax. Charges imposed after the goods are loaded onto the vessel for export purposes, such as ocean freight, pilotage, and tug boat charges, are exempt from service tax.

Question 34

What is meant by transshipment services?

Accepted Answer

Transshipment is a vessel transfer activity involving goods delivery services from a place outside Malaysia that arrive at and depart from the same Malaysian customs port or airport, without involving any break-bulk activity, for the purpose of:

(i) transferring or unloading goods from one aircraft or vessel to another aircraft or vessel until the goods are loaded onto the aircraft or vessel and transported out of Malaysia; or

(ii) transferring or unloading goods from an aircraft or vessel to a customs warehouse, a licensed warehouse, or another warehouse or place approved by the Director General, until the goods are loaded onto a vessel or aircraft and transported out of Malaysia.

Logistics management services, port/terminal handling, transportation, and warehousing involved in transshipment activities are exempt from service tax.

Example
Energy Limited Vessel (ELV) carries container cargo from New Zealand to Vietnam and calls at Port Klang for transshipment activities. ELV obtains ship stores, ship spares, and fuel.

The container cargo of ELV is transferred to a Maersk vessel (transshipment) for the final destination in Vietnam. Port charges imposed for this transshipment activity are not subject to service tax.

However, the supply and delivery of ship stores, ship spares, and fuel are subject to service tax.

Question 35

What is meant by door-to-door delivery services?

Accepted Answer

Door-to-door goods delivery services are delivery services that involve:

(i) The provision of goods delivery services from a place outside Malaysia to a place within Malaysia, or from a place within Malaysia to a place outside Malaysia, without the involvement of a third party between the delivery service provider and the customer. However, the delivery service provider is allowed to use the services of third parties to perform the delivery service;

(ii) The provision of goods delivery services by the same service provider to the recipient;

(iii) The movement of the goods using the same airway bill / bill of lading / consignment note / delivery order to the recipient; and

(iv) The use of the same invoice for delivery charges from the service provider to the recipient (single billing invoice).

Example 1
Seller C in Thailand appoints ABC Thailand to deliver goods to a buyer in Sepang, Malaysia. ABC Thailand appoints ABC Malaysia to manage the delivery of the goods to the customer in Sepang.

No invoice is issued by ABC Malaysia to the customer in Sepang. The customer in Sepang makes payment only to Seller C in Thailand. The door-to-door delivery of goods by ABC Malaysia to the customer in Sepang is granted an exemption from service tax.

Example 2
Wendy purchases a Gucci handbag from Tokyo. For delivery to Malaysia, Wendy uses the services of DMB to import the goods to her residence in Ulu Choh, Johor, on a door-to-door basis.

For the delivery to Malaysia, DMB Japan uses the services of DMB Malaysia under a single billing arrangement. Service tax is not imposed on the entire door-to-door delivery chain because the goods enter Malaysia using the same airway bill from Tokyo to Ulu Choh.

DMB uses the services of courier CityExpress from their service center in Johor Bahru to Ulu Choh because DMB does not have its own delivery service to Ulu Choh. CityExpress does not need to charge service tax to DMB because it qualifies for the B2B exemption, as CityExpress and DMB fall under the same item (item 1(c)).

Question 36

My company is already registered under Group G, Item (i), management services for providing preventive maintenance services. Do I need to re-register?

Accepted Answer

Companies already registered under Group G, Item (i) do not need to re-register. They only need to update their registration information with the Customs Department (OKC) in Item 13 and add the information on taxable services, namely maintenance or repair services.

Question 37

Who is required to register under ACP 2018 for maintenance and repair services, and when must the registration be made?

Accepted Answer

Any person or business that provides maintenance and repair services must calculate the total value of taxable services provided in the current month and the following eleven months. If the total value exceeds RM500,000, the person or business is required to apply for registration under ACP 2018. The application must be submitted no later than the last day of the month following the month in which the threshold is exceeded.

A registered person is responsible for:

(i) Charging service tax on taxable services;
 (ii) Issuing invoices to customers for any transaction related to the provision of taxable services;
 (iii) Submitting the SST-02 service tax return electronically or manually and paying the service tax before the due date; and
 (iv) Keeping proper records relating to service tax transactions.

Question 38

What are taxable services under repair and maintenance services?

Accepted Answer

Taxable Services
A. Preventive Maintenance Services
 18. Preventive maintenance services are maintenance activities planned to prevent the occurrence of damage. These maintenance services are carried out routinely, on a scheduled basis, or periodically.
Example 1 
DEF Company signed a 24-month maintenance contract for quarters with JKR Selangor. The scope of work is divided into two parts: routine work and repair work (mechanical, civil & electrical). Routine work includes grass cutting, fumigation (pest control), and hedge trimming. This routine work is to be carried out once every two months. Routine work is subject to service tax.

Meanwhile, repair work on the residential quarters is performed only when there are complaints from the occupants. Repair services on residential buildings are not subject to service tax.

Example 2
Cuci Bersih Enterprise (CBE) signed a service contract to clean all buildings and maintain the grounds and landscaping at the Faculty of Medicine, University of Southern Malaysia. The contract consists of two (2) parts: cleaning services and maintenance services.

For cleaning services, CBE is required to clean the buildings by washing and sweeping floors and drains, as well as wiping windows. This work must be performed daily, and payment is made monthly.

Similarly, for grounds and landscaping maintenance, CBE must carry out activities such as mowing and tilling, fertilizing, pruning, watering, pest and disease control, weeding, and other tasks. This work is also performed daily, with monthly payment. Under this contract, cleaning services are taxable under cleaning services, while grounds and landscaping maintenance services are taxable under maintenance and repair services.

B. Corrective Maintenance or Repair Services
 19. Corrective maintenance or repair services are emergency-based, ad hoc, upon request, or unscheduled.
 20. Repair services involve restoring a product to its original condition or improving it by replacing damaged parts or enhancing existing specifications.

Example 1 
ABC Company signed a structural platform maintenance contract with Petrolkita Berhad, which is a “call-up contract.” The contract consists of work orders throughout the contract period, and the value of each work order is based on the service rate schedule specified in the contract.
This corrective maintenance service is subject to service tax.

Example 2 
Technology Sdn Bhd (TSB) appointed Farm IT Sdn Bhd (FITSB) to carry out maintenance of TSB’s ICT equipment at its office, such as personal computers, laptops, projectors, printers, and network equipment (LAN).

Under the contract, FITSB will receive complaints and fault information through the system. Maintenance work will commence after a contract order (CO) is issued by TSB.
The repair services provided by FITSB are subject to service tax.

Question 39

What are non-taxable services under repair and maintenance services?

Accepted Answer

Repair and maintenance services not subject to service tax:-

1) Maintenance management services related to land or buildings for residential use provided by any developer, joint management body, management corporation, or residents’ association are not subject to service tax.

Example
Creative JMB is a joint management body established under the Strata Management Act 2013, responsible for managing and maintaining the CreativeResidence residential building. Creative JMB charges management fees to the parcel unit owners at Creative Residence. These fees are not subject to service tax.

2) Repair services for residential buildings.

Example
Halim called a plumber to fix a clogged pipe in her house. The plumber found a stone blocking the water flow into Halim’s bathroom. The plumber removed the stone using the appropriate procedure. The repair service provided by the plumber to Halim is not taxable because it involves repair services for a residential building.

Question 40

What is meant by maintenance and repair services for service tax purposes?

Accepted Answer

Maintenance services refer to activities carried out by a service provider to preserve, care for, operate, regulate, control, prevent, restore, or manage a building, goods, land, or system so that it can function properly and effectively, meet current standards, improve condition and performance, extend lifespan, enhance productivity, ensure safety, and minimize the risk of damage, accidents, and other related issues.

Maintenance services may cover various service areas, including equipment maintenance, facility management, road maintenance, computer or information technology maintenance, telephone maintenance, field maintenance, drain and ditch maintenance, system maintenance, and other maintenance services related to buildings, land, goods, and systems.

Repair services refer to activities involving fixing, correcting, or restoring a building, goods, land, or system that is damaged, not functioning, or requires maintenance. Repair services form part of maintenance services.

For service tax purposes, the activities listed below fall under the category of corrective maintenance or repair services:
 • (i) Calibration
 • (ii) Adjustment
 • (iii) Reconditioning
 • (iv) Reconfiguration
 • (v) Overhaul
The above list is not exhaustive.

Maintenance and repair services are essential to ensure the performance and safety of a building, goods, land, or system. These services also help prevent unexpected damage and ensure that buildings, goods, land, or systems function properly over a long period of time.

Generally, there are two types of maintenance services: preventive maintenance and corrective maintenance.

Question 41

What is the Service Tax threshold for food and beverage (F&B) businesses in Malaysia?

Accepted Answer

For restaurants, cafes, food courts, catering services, and F&B outlets, the Service Tax registration threshold is RM1,500,000 annual taxable turnover. Once this threshold is exceeded, F&B businesses must register for Service Tax via MySST.

Question 42

Are services that operate from home or any premises, providing and selling food and beverages online, subject to service tax?

Accepted Answer

Online food and beverage preparation and sales services may be subject to service tax. Such services provided by an entity can be taxed if the entity offers catering services and the sales value exceeds the prescribed threshold.

Question 43

Are restaurants and food & beverage outlets required to register for SST?

Accepted Answer

Restaurants, cafes, catering services, and food courts exceeding the annual revenue threshold of RM1.5 million must register for Service Tax.

Question 44

Are tips given voluntarily by customers subject to service tax?

Accepted Answer

Tips given voluntarily by customers to restaurant staff are considered a token of appreciation for the service provided. Such tips are not subject to service tax.

Question 45

Are cleaning services subject to service tax, and which types of cleaning services are taxable?

Accepted Answer

Cleaning services are subject to service tax when provided by a cleaning service provider as listed under the Service Tax Regulations 2018 (Item 13, Group I, First Schedule). Services that involve cleaning commercial or industrial goods, land, or buildings are taxable. However, cleaning services for religious, educational, residential, or agricultural purposes are not subject to service tax.

Cleaning service providers are required to charge service tax at a rate of 6% to their customers for taxable cleaning services and must account for this tax to the RMCD.

Question 46

How does service tax apply to services provided within, between, or to Designated Areas (DA)?

Accepted Answer

• Services within or between Designated Areas:
- Taxable services provided within a Designated Area (DA), between Designated Areas, or between a Designated Area and a Free Zone are not subject to service tax, as stated under Section 48 of the Service Tax Act 2018.

• Services provided by businesses based in a DA:
- Any cleaning services provided by a person whose main place of business is located in a Designated Area are subject to service tax in Malaysia, under Section 49 of the Service Tax Act 2018.

• Services provided to a DA by businesses based in Malaysia:
- Any taxable services provided by a registered person whose main place of business is in Malaysia to a Designated Area are subject to service tax, as specified under Section 50 of the Service Tax Act 2018.

Question 47

How does service tax apply to services provided within, between, or to Special Areas (SA)?

Accepted Answer

• Services within or between Special Areas:
- Taxable services provided within a Special Area (SA), between Special Areas, or between a Special Area and a Designated Area (DA) are not subject to service tax, as stated under Section 53 of the Service Tax Act 2018.

• Services provided by businesses based in a Special Area:
- Any taxable services provided by a person whose main place of business is located in a Special Area into Malaysia are subject to service tax, under Section 54 of the Service Tax Act 2018.

• Services provided to a Special Area by businesses based in Malaysia:
- Any taxable services provided by a registered person whose main place of business is in Malaysia to a Special Area are subject to service tax, as specified under Section 55 of the Service Tax Act 2018.

Question 48

What are the registration requirements and responsibilities for cleaning service providers under the Service Tax Act 2018?

Accepted Answer

Cleaning services became a taxable service effective 1 January 2019. Under the Service Tax Act 2018, any person providing cleaning services must calculate the total value of taxable services for January 2019 and the following eleven months.

If the total value exceeds RM500,000, an application for registration must be submitted no later than 28 February 2019. Registration will take effect from 1 March 2019, and service tax must be charged starting on that date, as provided under Section 13(3) of the Act.

For persons who were already registered before 1 January 2019 and provide this new taxable service, an application to add the new service activity must be submitted if the projected value for the twelve-month period exceeds RM500,000. Service tax on the new service must also be charged starting 1 March 2019.

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