service tax incurred by a business is a final cost. • The key challenge for businesses is in determining which services fall within the category of taxable services. While many categories such as hotels, legal services and local air transportation are relatively easy to classify, others such as management, consultancy and IT services have inherent ambiguity which must be managed. • An additional layer of complexity arises due to several concessions designed to reduce service tax applying at multiple stages of the supply chain, or on exported or export related services. • Service tax returns must be filed and the tax paid every two months.
Service Tax Rate of tax • The service tax rate is fixed at 6%. A specific rate of RM252 is imposed on the issuance of principal or supplementary credit card and charge card, on annual basis. Key differences between the previous Service Tax Act and the current Act are tabulated below: Area Previous Act Current Act Registration threshold The registration threshold varied according to the taxable person / taxable services. A single registration threshold of RM500,0000 would apply (except for credit card / charge card providers, which would not be subject to a threshold). Issuance of invoices Invoice must be issued and show service tax payable separately from the charges for the taxable service provided. Invoice must be issued and show prescribed particulars. Late payment penalties A maximum of 50% of the tax due penalty will be imposed and the maximum penalty would be reached within 150 days. A maximum of 40% of the tax due will be imposed and the maximum penalty would be reached within 90 days.
Sales Tax • The Sales Tax is a single-stage tax, charged and levied on taxable goods imported into Malaysia and on taxable goods manufactured in Malaysia by a taxable person and sold by him (including used or disposed goods). In Malaysia, it is a mandatory requirement that all manufacturers of taxable goods are licensed under the Sales Tax Act 2018. A taxable person is a person who manufactures taxable goods and is liable to be registered if the annual turnover has exceeded RM500,000.00 threshold. Such person is required to be registered under MySST.
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