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Service Tax Act 2018 and its subsidiary legislation was recently updated to incorporate changes announced in Budget 2024. Service tax is imposed on taxable services specified under the First Schedule of the Service Tax Regulations 2018 with the tax rates as follows:
Effective 26 February 2024, the taxable services is expanded to include new types of taxable services as follows:
Service tax is only charged on the new taxable service from 1 March 2024 as the taxable services provided between 26 February 2024 and 29 February 2024 are exempted.
In addition, effective 1 March 2024, the service tax rate is increased from 6% to 8% on all taxable services, except for the following:
On 11 March 2024, it was announced that a service tax exemption is granted for 5 types of logistic services as follows:
- Logistic services for directly exported goods
- Logistic services for transshipment activities
- Logistic services for transit activities
- Door-to-door logistic services
- Food and beverage delivery services through e-commerce
Service Tax Policy dated 29 March 2024 also granted a service tax exemption on ocean (sea) freight charges for the following voyages:
- Peninsular Malaysia to Sabah/Sarawak/Labuan
- Sabah/Sarawak/Labuan to Peninsular Malaysia
- Travel between Sabah, Sarawak and Labuan
On 31 March 2024, it was announced that a service tax exemption is granted on maintenance services as follows:
- Maintenance services related to land or buildings for residential purposes provided by developers, joint management bodies, or resident associations
- Repairs of residential buildings
- Sinking funds
Subsequently, Service Tax Policy dated 1 April 2024 indicates a policy treatment on maintenance services effective 1 March 2024 as follows:
- Maintenance services (including repairs) of goods/equipment (moveable items) in residential houses are subject to service tax
- Maintenance services (including repairs) of goods/equipment (fixed to the structure of the building) provided directly to the owner or accupant of the residential house are not subject to service tax
- Sinking fund related to residential houses imposed by the developer, joint management body, or management corporation are not subject to service tax
In areas of ambiguity, taxpayers are advised to seek clarification from the Royal Malaysian Customs Department (RMCD).
