Sales and service Tax Act 2018

SANTHANASAMY SUBBIAH – GSTA (129)
CA(MAL),CMA(UK),MBA(FIN)UPM, CGMA,AMIM
3rd September 2018
Jinhold Apartment Hotel, Bintulu, Sarawak.
Preparing Business for the Transition of
GST to SST Mechanism
Sales Tax Act 2018 and Services Tax Act 2018

Introduction
NEW MALAYSIAN GOVERNMENT FISCAL REFORM
• Responsible and progressive fiscal reforms to enhance fiscal equity,
transparency and accountability, and support accelerated productive
investments and economic growth
• Assess the entire revenue base of the federal government to improve its
breadth, responsiveness, and progressiveness

Introduction
New Malaysian Government Fiscal Reform
• Includes abolishing GST, targeted petrol subsidies, streamlining minimum wages,
better healthcare schemes, reviewing mega projects, etc.
• Subsequent reforms will seek to ensure fiscal conduct that is more sustainable,
inclusive and growth-enhancing, to improve investment climate, reduce cost of
living and doing business, raise national competitiveness, and promote
economic prosperity

CLOSING-OUT GST
Prepare for Final Audit on De-Registration
• Review of historical GST position to identify potential exposures in anticipation
of final audit
• Assess potential adjustments on GST de-registration for stock on hand and other
assets – account for GST at 0%
• Processes to be put in place for valuations of “stock on hand” and WIP as at the
implementation date
• GST return trends to assess whether final returns to be in a payable or refund
position – managing potential cash flow issues

CLOSING-OUT GST
Pursuing Outstanding GST Refunds including Sales Tax Special Refunds
• Unclaimed bad debt relief
• Challenging previous administrative decisions by Customs
• Pending applications/clarifications/notifications with Customs
• New or ongoing litigation cases

REPEAL OF GOODS AND SERVICES TAX ACT 2014
The Goods and Services Tax Act 2014 is repealed.
Continuance of liability - Section 4(1)
(a) Any liability incurred may be enforced; or
(b) Any goods and services due, overpaid or erroneously paid may be collected,
refunded or remitted, under the repealed Act as if the repealed Act had not been
repealed
The repeal of GST Act 2014, section 178, 181,and 191 of the repeal Act shall
continue to remain in operation after the appointed date.

REPEAL OF GOODS AND SERVICES TAX ACT 2014
Section 178 - Sales Tax Act 1972 shall continue to remain in operation after the
appointed date.
Section 181 - Service Tax Act 1975 shall continue to remain in operation after the
appointed date.
Section 191 - Special refund on sales tax paid under the Sales Tax Act 1972 shall
continue to remain in operation after the appointed date.
Any pending liability claims shall continue to remain in operation after the
appointed date.

PENDING APPLICATION FOR REVIEW AND PENDING
APPEAL
(1) Any application for review under subsection 124(1) of the repealed Act pending
before DG for his decision immediately before the appointed date shall, on or
after the appointed date, be dealt with under the repealed Act as if the
repealed Act had not been repealed.
(2) Any decision made by the DG under subsection 124(2) of the repealed Act
before or after the appointed date, which is appealable by an aggrieved person
to the Customs Appeal Tribunal provided that the appeal is made within thirty
days from the date such decision was made known to the aggrieved person by
DG

PENDING APPLICATION FOR REVIEW AND PENDING
APPEAL
(3) Any appeal before the GST Tax Appeal Tribunal which is pending immediately
before the appointed date shall, on or after the appointed date, continue to be
heard and decided by the Customs Appeal Tribunal.

FURNISHING OF RETURN FOR THE LAST TAXABLE PERIOD
AND PAYMENT OF GOODS AND SERVICES TAX
Section 40 of the repealed Act
Any taxable period that begins before the appointed date and ends after the
appointed date shall be deemed to end on the appointed date.
The person who is registered under the repealed Act shall:-
(a) Furnish the return for all supplies made in the taxable period referred to in
subsection (1) as at the appointed date; and
(b) Pay the amount of the goods and services tax due and payable relating to the
supplies, to the DG not later than one hundred and twenty days from the
appointed day.

FURNISHING OF DECLARATION AND PAYMENT OF GOODS AND
SERVICES TAX
Pursuant to repeal of GST Act 2014
Any person referred to in subsection 42(1) of the repealed Act who is liable for
goods and services tax in the month before the appointed date shall:-
(a) Furnish a declaration under section 42 of the repealed Act, and
(b) Pay the amount of goods and services tax due and payable, to the DG not
later than thirty days after the appointed date.
(c) Final GST-03 return for the taxable period August 2018

CLAIM FOR INPUT TAX AND REFUND
(1) Any input tax under the repealed Act which has not been claimed before the
appointed date shall be claimed in the return furnished under paragraph 6(2)
(a) within one hundred and twenty days from the appointed date, and that
claim shall be considered as the final claim for all input tax.
(2) Subject to verification, audit or investigation, any refund for:-
(a) Any input tax under section 38 of the repealed Act which has not been
made by the DG on the appointed date; or
(b) Any input tax relating to the claim made under subsection(1), shall be paid by
DG within six years from 1st September 2018. [s 8(2) of GST (Repeal) Act 2018]

CONTINUES OF APPOINTMENT AND EMPLOYMENT
Pursuant to repeal of GST Act 2014 for the purpose of section 4
(1) Any person other than an officer of customs may be appointed by, or employed
with the concurrence of, the DG under subsection 5(3) of the repealed Act, on
or after the appointed date, for any duty or service as if the subsection had not
been repealed.
(2) Any person other than an officer of customs who:-
(a) Has been appointed or employed under subsection
5(3) of the repealed Act whose appointment or
employment is still valid immediately before the appointed date;
or

CONTINUES OF APPOINTMENT AND EMPLOYMENT
PURSUANT TO REPEAL OF GST ACT 2014 FOR THE PURPOSE OF SECTION 4
(b) is appointed or employed under subsection (1), shall continue to perform the
duty or service until his appointment or employment expires or is revoked by the
DG, whichever is the earlier.

PUBLIC RULING / ADVANCE RULING / DG’S DECISION /
DECISION MADE BY RMCD
• Public rulings / advance rulings / DG’s decisions / Industry guidelines / Policy
papers from sectors related to GST treatment issued by RMCD shall continue to
remain in operation after the appointed date.
• Blacklist will still continue
• Tax Agents whose approval under section 170 of the repealed Act is still valid
immediately before the appointed date may continue to act on behalf any
person for any matter until such approval or is revoked by the Minister,
whichever is earlier.
• Audit will continue after 1st June 2018 and GST registered person is required to
keep a document / business record for 7 years

BILL OF DEMAND (BOD) / INVESTIGATION / PROSECUTION /
APPEAL TO TRIBUNAL / COMPOUND
• Bill of Demand (BOD) issued by RMCD prior to 31st May 2018 claiming a certain
amount of tax to be paid is still payable
• If a company has been investigated by RMCD for not submitting the GST-03
return, investigation will be ongoing
• If a company has been charged by RMCD for failing to pay GST, proceeding will
continue
• If a company has filed an appeal at the GST appeal tribunal, appeal will continue

Sales and Services Tax 2018
• The reintroduction of the Sales and Services Tax (SST) will take effect from 1st
September 2018. The Goods and Services Tax (GST) has been repealed effective
31st August 2018.
• SST was estimated to raise about RM21 billion in revenue
annually and would mitigate the loss from GST collection

PENDING REGISTRATION STATUS FOR SST
APPLICATION
When To Charge Sales Tax or Service Tax
To all applicants for Sales Tax or Service Tax Registration with PENDING STATUS
and given Application Number by MySST please take note that your registration
will be approved automatically effective 1 September 2018 as Date of
Registration, as provided for by Section 13 of the Sales Tax Act 2018 and Service
Tax Act 2018.
Therefore please take note that you should
to charge Sales Tax or Service Tax beginning
1 September 2018, regardless either you
receive your registration letter or not.

PENDING REGISTRATION CANCELLATION OF AUTO
REGISTERED SST
Effective Date 31 August 2018
To all auto-registered SST who have applied for cancellation via
email daftarcjcp@customs.gov.my please take note that your cancellation will be
approved automatically effective 31 August 2018 based on your declaration
statement in your application. You will be notify via email to the email address
used to send for cancellation. There is no need to charge Tax as of 1 September
2018.
Due to the high volume of email received
and email capacity there will be some delay
to notify you of the cancellation approval.

AMENDMENT TO THE “LAMPIRAN I SURAT KELULUSAN PENDAFTARAN DI
BAWAH SEKSYEN 13 AKTA CUKAI PERKHIDMATAN 2018 “
• To all registered person under the Service Tax Act who have received the
registration approval letter dated in the month of August 2018, please cancel
the Lampiran I and replace it with the new one linked here > Lampiran 1

SALES TAX LEGISLATION
Act
Sales Tax Act 2018
Regulations
• Sales Tax Regulations 2018
• Sales Tax (Customs Ruling) Regulations 2018
• Sales Tax (Rules of Valuation) Regulations 2018
• Sales Tax (Compounding of Offences)Regulations 2018

SALES TAX LEGISLATION
Order
• Sales Tax (Amount Of Sales Value Of Taxable Goods Manufactured) Order
2018
• Sales Tax (Rates Of Tax) Order 2018
• Sales Tax (Goods Exempted From Sales Tax) Order 2018
• Sales Tax (Persons Exempted from Sales Tax) Order 2018
• Sales Tax (Exemption From Registration) Order 2018
• Sales Tax (Imposition of Tax In Respect Of Designated Areas) Order 2018
• Sales Tax (Imposition of Tax In Respect Of Special Areas) Order 2018
• Sales Tax (Appointment of Date Of Coming Into Operation) Order 2018

Scope of Manufacturing [S 3(1)]
Meaning of “Manufacture”
• The conversion of materials by manual or mechanical means into a new product
by change in size, shape, composition, nature or quality of such materials and
include assembly of parts into a piece of machinery or other products but does
not include installation of machinery or equipment for purpose of construction;
and
• In relation to petroleum, any process of separation, purification, refining,
conversion and blending.

Scope of Sales Tax
Charge To Tax
Sales tax is charged and levied on all taxable goods:
• (i) Manufactured and sold, used or disposed of in Malaysia by a registered
manufacturer; or
• (ii) Imported into Malaysia by any person.
Sales tax is charged, levied and payable on any
importation of goods into Malaysia and is treated
as if it were customs duty or excise duty and as
if such importation is dutiable and liable to customs
duty or excise duty.

Rate of Sales Tax
Sales tax is an ad valorem tax and different rates applied based on groups of
taxable goods, (5% and 10% ). Sales tax for petroleum is charged on a specific
rate which is different from other taxable goods.
Section 10 of the Sales Tax Act 2018 empowers the Minister to fix the various
rates of sales tax as prescribed in the Sales Tax (Rates of Tax) Order 2018 to be
imposed on taxable goods which are not exempted
by the Minister of Finance through the
Sales Tax Exemption Orders which comes
into force on 1 September 2018.

Sales Value
• Locally manufactured goods, sales tax is levied on the sales value of the taxable
goods. It is pertinent that the determination of sales value complies with the
provisions under the Sales Tax Act 2018.
• In this connection, the Sales Tax (Rules of Valuation) Regulations 2018 specifies the
rules for the determination of sales value of locally manufactured goods.
• Generally, the transaction value of the taxable goods forms the basis of the sales
value of such taxable goods.

Sales Value
• Taxable goods imported into Malaysia for home consumption, the sales value of
the taxable goods represents the sum of the following amounts:
• (i) The value of such taxable goods for the purpose of customs duty as determined
in accordance with the Customs Act 1967;
• (ii) The amount of customs duty, if any, paid or to be paid on such taxable goods;
and
• (iii) The amount of excise duty if any, paid or to be paid on such taxable goods.

Taxable Goods
Taxable Goods
Taxable goods are goods of a class or kind that are not being exempted from sales tax.
Goods exempted from sales tax are listed in Schedule A of the Sales Tax (Goods
Exempted from Sales Tax) Order 2018.
Threshold (Annual sales turnover)
The total sale value of taxable goods for the purpose of registration of any
manufacturer is prescribed by the Minister in the Sales Tax (Amount of Sale Value of
Taxable Goods Manufactured) Order 2018 is RM 500,000 over 12 month period.

Registration
• Calculate threshold using Historical method [s12(2)(a), Sales Tax Act 2018], or
• Future method [s12(2)(b), Sales Tax Act 2018], by adding 11 months backward
or 11 months forward to the current month.
• Mandatory registration within 30 days when threshold is reached
• Manufacturers liable to be registered must register before 1 September 2018
• Automatic registration with effect from 1st August 2018 based on database in
GST system. Non-manufacturers who are wrongly registered automatically must
inform the RMCD

Registration
Voluntary Registration
• Only for manufacturers of taxable goods whose turnover is below threshold of
RM 500,000. No time limit set. Register online through MySST
Online Registration
• On-line application for registration may be made
via the MySST Portal, which is set up to facilitate
manufacturers who wish to apply to be a registered
manufacturer. The online application is accessible
at www.mysst.customs.gov.my.

Failure to Register
Historical (Retrospective) Method [s 94, Sales Tax Act 2018]
(a) Fine not more than RM30,000; or
(b) Imprisonment not more than 2 years; or
(c) Both
Future Method (Prospective) Method
(a) Fine not more than RM30,000; or
(b) Imprisonment not more than 2 years; or
(c) Both
Failure to register [s 13(5), Sales Tax Act 2018

Registration of Partnership
• The registration of persons carrying on a business in
a partnership as a registered manufacturer shall be in
the name of the firm. If the same persons are carrying
on separate businesses in a partnership as a registered
manufacturer, the registration may be in the name of the
respective firms.

Cessation of Liability to be Registered
• The registered manufacturer shall notify the DG in writing including the date of
cessation if:
• (i) He ceases to carry on the business of manufacturing taxable goods; or
• (ii) His total sale value of taxable goods in that month and the eleven months
immediately succeeding that month does not exceed RM500,000
• The registered manufacturer may make a written request to cancel his
registration within 30 days from the date of cessation.

Accounting for Sales Tax
Taxable Period
• The first taxable period of every taxable person shall begin from the date he
should have been registered under section 13, Sales Tax Act 2018 and end on
the last day of the following month and the subsequent taxable period shall be a
period of two months ending on the last day of any month of any calendar year.
• First Taxable Period Bimonthly Sept – Oct 2018
• Subsequent Taxable Period Nov-Dec, Jan-Feb, Mar-Apr, May-Jun, ……

Invoices
• Every registered manufacturer is required under the Act, unless otherwise
prescribed by regulation, to issue an invoice, either in hard copy or soft copy to
the purchaser in respect of any transaction relating to the sale of taxable goods.
• The amount of sales tax payable is to be stated separately to the value of the
taxable goods sold and be recovered by the registered manufacturer from the
purchaser.
• The invoice must comply with the following requirements:
• (i) Contain prescribed particulars
• (a) The tax invoice serial number;
• (b) The date of the invoice;

Invoices
• (c ) The name, address and identification number of the registered manufacturer
• (d) The name and address of the person to whom the taxable goods is sold
• (e) Quantity and description of the goods;
• (f) Any discount offered;
• (g) For each description, distinguish the type of goods, quantity and amount
payable excluding tax;
Non Compliance [s 21(4), Sales Tax Act 2018 - On conviction [s 94], Sales Tax Act
2018
i. Fine not more than RM30,000
ii. Imprisonment not more than 2 years or
iii. Both

Invoices
• (h) The total amount payable excluding tax, the rate of tax and the total tax
chargeable to be shown as a separate amount or a total amount payable inclusive
of total of tax chargeable; and
• (i) Any amount expressed in a currency other than ringgit shall also be
expressed in ringgit at the selling rate of
exchange prevailing in Malaysia at the time
of manufacturing.
• (ii) It must be in the national language
or English;

Issuance of Invoices non-Paper form
[s 22, Sales Tax Act 2018]
Invoice recorded in computer
• A registered manufacturer
• (a) Transmitted / make available to a purchaser by electronic means (eg. email);
or
• (b) are produced on any material other than paper and are delivered to the
purchaser.
Treated as having issued invoice - VALID

Credit Notes and Debit Notes
• A credit note is issued when the amount previously invoiced is reduced or a
transaction is cancelled due to the following circumstances :-
• (i) Where goods are returned by the purchaser due to wrong quantity,
poor or defective quality or uncontracted goods, provided that the goods have not
been subsequently sold or disposed of
by the purchaser;
• or (ii) Discounts given on taxable goods sold by
the taxable person where the discount is given freely
to all his customers.

If the taxable person has furnished his return to the DG and subsequently there is a
deduction of sales tax due to paragraph 49, the taxable person selling taxable goods
must issue a credit note for such deduction.
A debit note is issued when the amount previously invoiced
in is increased due to an addition of sales tax to be paid
for any price adjustment.
The taxable person is required to do the adjustments
relating to a credit note or debit note in his return when
the credit note or debit note is issued or if he has ceased
to be a taxable person, he shall make the adjustment
in the return for the last taxable period during which he was registered.

• A credit note or debit note must contain the following particulars:
• (i) The words “credit note” or “debit note” in a prominent place;
• (ii) The serial number and date of issue;
• (iii) The name, address and identification number
of the registered manufacturer;
• (iv) The name and address of the person to
whom the taxable goods is sold;
• (v) The reason for the issuance;

• (vi) The description, quantity and amount of taxable goods for which the credit
note or debit note is given;
• (vii) the total amount excluding tax;
• (viii) The rate and amount of tax; and
• (ix) The number and date of the original invoice.

Declaring Sales Tax return
• Sales tax is accounted for on accrual basis
• Taxable period: every 2 months
• Filing deadline: not later than last day of following month after end of taxable
period
• Submit electronically or by post to processing centre
• Cannot submit by hand personally
• Claim bad debt within 6 years from date goods sold.
Repay when payment received

Declaring Sales Tax Return
• The taxable persons shall furnish, among others, the following particulars in the
sales tax returns:
 sales value of all taxable goods sold during the taxable period;
 value of taxable goods disposed of otherwise than by sales;
 value of all taxable goods used by him otherwise as raw materials;
 the amount of sales tax payable
• Every licensed manufacturer is required to submit a sales tax returns whether or
not any taxable goods are manufactured, sold, disposed of otherwise than by
sales, disposed of otherwise than by use as material in manufacture and
whether or not any sales tax is payable for such taxable period

Payment of Sales Tax
• Electronically
• By cheque, bank draft, posted to SST processing centre
• Evidence of payment is based on postal date; not date of cheque clearance

Duty to Keep Records
• (1) Every taxable person shall keep complete and true records written up to
date of all transactions which affect or may affect his liability to sales tax,
including the following records:
• (a) all records of sales of taxable goods by or to that taxable
person including invoices, receipts, debit notes and credit notes;
• (b) all records of importation and exportation of taxable goods;
and
• (c) all other records as the Director General may determine.
• (2) Any record kept under this section shall be:-
• (a) preserved for a period of seven years from the latest date to which the
record relates;
• (b) in the national language or English language; and

Duty to Keep Records
• (c) kept in Malaysia, except as otherwise approved by the Director General.
• (3) Record is in an electronically readable form, the record shall be kept in such
manner as to enable the record to be readily accessible and convertible into
writing.
• (4) Record is originally in a manual form and is subsequently converted into an
electronic form, the record shall be retained in its original form prior to the
conversion.
• (5) A copy of the record shall be admissible in evidence
in any proceedings to the same extent as the record itself.
• Non- Compliance [s 24(6), Sales Tax Act 2918,
Upon Conviction
• i. Fine less than RM50,000 ii. Imprisonment less than 3 years, or iii. Both

Tax Return
Correction of Errors
If a person makes an error in any return, he can correct it in SST-02 Form in such
manner and within such time as the officer of sales tax may require.
Final Sales Tax Return
Any taxable person who ceases to be liable to be registered
or cease manufacturing taxable goods has to furnish
a final return not later than thirty (30) days after such
cessation.
.

FURNISHING OF RETURNS AND PAYMENT OF SALES
TAX DUE AND PAYABLE
Every taxable person shall, in respect of his taxable period, account for the sales
tax due in a return and shall furnish to the DG not later than the last day of the
month following the end of his taxable period to which the return relates.
Any registered manufacturer who ceases to be liable to be registered or ceases to
manufacture taxable goods shall, not later than thirty days after such cessation,
furnish a return.
Registered manufacturer who ceases to carry on business as a manufacturer has in
stock any taxable goods on which sales tax due and payable has not been paid,
such registered manufacturer shall furnish his last taxable period as if such goods
had been sold by him during such taxable period, and he shall pay the sales tax
accordingly

SUBMISSION OF AUDIT CERTIFICATE
• The Director General may require a registered manufacturer to submit annually
an audit certificate, signed by a public accountant not in the employment of the
registered manufacturer, in relation to the records required to be kept by the
registered manufacturer under section 24 in respect of the registered
manufacturer’s production and sale of taxable goods manufactured by him.

FAILURE TO NOTIFY CESSATION OF PARTNER
Registered manufacturer under partnership fail to inform DG within 30 days from
date of cessation :-
(a) Notify in writing [s 16 (3)(a)]
(b) Pay the proportion of sales tax due and payable [s 16(3)(b)]
(c) Failure of notification [s 16(9)]
Upon conviction
i. Fine less than RM30,000; or
ii. Imprisonment less than 2 years ; or
iii. Both

FAILURE TO NOTIFY CESSATION OF LIABILITY
When a registered manufacturer fail to notify within 30 days where his business;
(a) ceases to manufacture taxable goods ; or
(b) ceases to be registered [s 17], where the taxable sales for the current month
plus 11 immediate succeeding months surpass an annual turnover of more
than RM 500,000 shall be liable and upon conviction [s 94] be;
iii. Both

FAILURE TO SUBMIT RETURN
[s 26(7)(a), Sales Tax Act 2018
• Fail to submit the return within one month after the end of the taxable period
(2 months) – [s 26(1),Sales Tax Act 2018
• Fail to submit the return within one month after the end of the varied taxable
period as approved by DG – [s 26(2),Sales Tax Act 2018
• Fail to submit the return within one month after the last taxable person cease
to be liable for sales tax – [s 26(1),Sales Tax Act 2018
• Fail to include the taxable goods in stock which has been sold during the last
taxable person ceased to having business – [s 26(4),Sales Tax Act
• Incorrect Return [s 26(7)(b), Sales Tax Act 2018 upon conviction
• i. Fine less than RM50,000, ii. Imprisonment less than 3 years, or iii. Both

LATE PAYMENT OF SALES TAX
[ 26(5), Sales Tax Act 2018]
Without prosecution [s 26(9)]
Late Penalty
1- 30 days 10%
1- 60 days 25%
1- 90 days 40%
With prosecution [s 26(8)] - Upon Conviction
i. Fine not more than RM50,000
ii. Imprisonment not more than 3 years
iii. Both
Note: Late payment mean i. less payment, ii. non payment, iii. late payment

SPECIAL RULES FOR DESIGNATED AREA (“DA”)
DA refers to Labuan, Langkawi & Tioman. PCA stands for Principal Customs Area
• Manufacturing activities in DA
• Proposed Sales Tax does not apply to DA except for petroleum
Importation from the world into DA - Exemption from Sales Tax except
• Langkawi: importation of marble, petroleum and anchovies
• Tioman: importation of petroleum and motor
• Labuan: importation of petroleum

SPECIAL RULES FOR DESIGNATED AREA (“DA”)
Removal of goods From PCA to DA: Deemed Export, No Sales Tax
• From DA to PCA: deemed import, subject to Sales Tax
• From DA to DA: no Sales Tax
• From DA to Special Area (definition below): no Sales Tax

SPECIAL RULES FOR SPECIAL AREA (“SA”)
SA refers to Free Zone, Licensed Warehouse,
Licensed Manufacturing Warehouse and Joint Development Area
Manufacturing activities in SA | Proposed Sales Tax does not apply to SA
Importation from the world into SA ,Generally, not subject to sales tax. Goods in
the free zone may be subject to sales tax if provided in the Proposed Special Area
Order

SPECIAL RULES FOR SPECIAL AREA (“SA”)
Removal of goods from PCA to SA: Deemed Export, no Sales Tax
• From SA to PCA: deemed import, subject to Sales Tax
• From SA to SA: no Sales Tax
• From SA to DA: no Sales Tax

POWER TO ASSESS
• Where any taxable person:-
• (a) fails to apply for registration under section 13;
• (b) fails to furnish a return under section 26; or
• (c) furnishes a return which appears to the DG to be incomplete or incorrect,
• the DG may assess the amount of sales tax due and the penalty payable by
the taxable person and shall notify him of the assessment in writing.
• Any refund of sales tax which ought not to have been paid to him, the DG may
assess the amount of the refund as being sales tax due and payable by him
and shall notify him of the assessment in writing.
• The assessment shall not be made more than six years.

RECOVERY OF SALES TAX/PENALTY AS CIVIL DEBT
Any sales tax due and payable, any surcharge accruing, or any penalty, fee or
other money payable, under this Act, may be recovered as a civil debt due to the
Government.
Invoice shows a sale of taxable goods as having taken place with sales tax
chargeable on the goods, shall be recoverable from the person who issued the
invoice an amount equal to:-
• (a) that which is shown in the invoice as sales tax;
• (b) so much of the total amount shown as
payable as is to be taken as representing sales tax.

PAYMENT BY INSTALLMENT
The DG may allow any sales tax due and payable, or penalty payable, to be paid
by instalments.
Where the sales tax is allowed to be paid by instalments, the penalty shall cease
to be calculated from the date the Director General allows the payment by
instalments.
Where there is a default in payment of any instalment on its due date for
payment of the balance of the amount due and payable, the whole outstanding
balance shall become due and payable on that date..
If the licensed manufacturer defaults in payment of
any one installment, a surcharge equivalent to
10% of the outstanding amount will be imposed

LIABILITY OF DIRECTORS
In relation to a company that is being wound up, where sales tax is due and
payable, surcharge is accrued, or penalty, fee or other money is payable, under
this Act by any company, limited liability partnership, firm, society or other body
of persons:-
• (a) the directors of the company;
• (b) the compliance officer
• (c) the partners of the firm;
• (d) the office bearers of the society; or
• (e) the persons responsible for the management of the body of persons,

LIABILITY OF DIRECTORS
shall be jointly and severally liable [s 34(1)] for the sales tax, surcharge, penalty,
fee or other money.
Directors will only be liable if the asset of the company is insufficient to meet the
amount due, after paying any sum having priority under the Companies Act
2016.[s 34(20)]

GOODS SUBJECT TO CUSTOMS OR EXCISE CONTROL NOT
TO BE DELIVERED UNTIL SALES TAX PAID AS DEMANDED
Imported taxable goods, no person shall be entitled to obtain delivery of such
goods from the customs control or excise control until the amount of the sales
tax assessed by the proper officer of sales tax on those goods has been paid in
full.
Any person may obtain delivery of imported taxable petroleum from the customs
control or excise control whether or not any part of or all of the sales tax due and
payable on such taxable petroleum have been paid Shall be jointly and severally
liable [S 34(1)]for the sales tax, surcharge, penalty, fee or
other money.

FACILITIES UNDER THE SALES TAX ACT
• Sales tax is a single-stage tax imposed at the manufactures’ level. In the case of
locally manufactured taxable goods, sales tax is levied and charge on the
finished goods when such finished goods are sold or disposed of.
• Various facilities are provided under the Sales Tax Act 2018 to allow the licensed
manufacturers to acquire taxable raw material and components used in the
manufacture of taxable goods free from Sales Tax
• Raw material/components used in the manufacture include the following:
• Materials that are physically incorporated into the finished goods;
• Packaging materials such as boxes, plastic bags etc.

• Exemption under Schedule A, B and C of the Sales Tax (Person Exempted from
Sales Tax) Order 2018
The schedules in the Order provides for the following:
• (i) Schedule A of the Order provides the list of persons or class of persons
exempted from payment of sales tax
• e.g. Ruler of States, Federal or State Government Department, Local Authority,
Inland Clearance Depot, Duty Free Shop

• (ii) Schedule B extends exemption of sales tax to manufacturers, not being
registered manufacturers, in respect of goods acquired by such manufacturers
for use in manufacturing of certain products.
• e.g. Manufacturer of specific non taxable goods – exemption of tax on the
acquisition of raw materials, components, packaging to be used in
manufacturing activities
• (iii) Schedule C provides exemption of sales tax to registered manufacturer on
the acquisition of raw materials, components and packaging materials to be
used in manufacturing of taxable goods.

Form C.J. 5A:
• In practice, there are licensed manufacturers who are not able to import directly,
or acquire directly from another licensed manufacturer taxable raw material and
components used in manufacture.
• Importation or acquisition of raw material and components are often transacted
through agents appointed by the suppliers.
• In this connection, under sales Tax Act 2018 allow a vendor to import or acquire
from another licensed manufacturer raw material and components free from
sales tax for supply to a licensed manufacturer

SALES TAX EXEMPTION APPLICATION
Item 1, Schedule C: Any registered manufacturer to import/purchase raw materials,
components, and packaging materials excluding petroleum exempted from the
payment of sales tax (formerly CJ5).
Information of Local Purchase:
1. Raw materials Lampiran C 1(i)
2. Components Lampiran C 1(ii)
3. Packaging materials Lampiran C 1(iii)
4. Manufacturing Aids Lampiran C 1(iv)

Information of Import Purchase:
1. Raw materials Lampiran C 1(v)
2. Components Lampiran C 1(vi)
3. Packaging materials Lampiran C 1(vii)
4. Manufacturing Aids Lampiran C 1(viii)

• The facilities is valid for a period of 2 years. The licensed manufacturer
should take note of the following:
• Raw material and components must be imported or purchased within the
validity period of the approval;
• The approved quantity should not be exceeded, if the approved quantity has
been exceeded, the licensed manufacturer need to submit a supplementary
application for additional quantity equivalent to the quantity of raw material
and component exceeded.
• The licensed manufacturer should be reminded of their duty to maintain full
and true records relating to the movement of raw material and components
imported or purchased under this facility

Item 2, Schedule C: Any registered manufacturer of petroleum product to
import/purchase raw materials, component and packaging material exempted from
the payment of sales tax (formerly CJ5).

Item 3, Schedule C: Any person acting on behalf of registered manufacturer to
import/purchase raw materials, components and packaging materials exempted from the
payment of sales tax (formerly CJ5A).

Item 4, Jadual C: Any person acting on behalf of registered manufacturer of
petroleum product to import/purchase raw materials, components and
packaging materials exempted from the payment of sales tax (formerly CJ5A).

Application By a Licensed Manufacturer To Deliver Goods To Another
Licensed Manufacturer To Complete Their Manufacturing And To
Acquire Back Such Goods Exempt From Payment Of Tax Item 5, Schedule
C, Sales Tax (Person Exempted From Payment of Tax) Order 2018.
Please attach the related information of goods to be send and acquire
back from sub-contractor:
1. Application Form For Item 5, Schedule C SP Jadual C5
2. Information of goods to be send to subcontractor Lampiran C5 (i)
3. Information of goods to be completed and subsequently acquire back Lampiran C5 (ii)

C.J. 5B:
• This facility is to facilitate those licensed manufacturers who are not able to cope
with the excessive demand or those requiring specialized manufacturing
operation.
• The licensed manufacturer who is approved this facility may send his goods, in
the form of raw material/components/work in progress, to another licensed
manufacturer for value-added operation and later to acquire back these goods
free from sales tax.
• The re-acquired goods is deemed as being manufactured by the first licensed
manufacturer who is then required to levy and charge sales tax when such goods
are sold or disposed of

Item 5, Schedule C: Any registered manufacturer to send semi-finished
taxable goods or finished taxable goods for subcontract work and
subsequently returned after completion of work exempted from the
payment of sales tax (formerly CJ5B).
1. Information Of Sub-Contractor Lampiran C5- Bahagian B
2. Information Of Goods To Be Send To Sub-Contractor Lampiran C5- Bahagian C
3. Information Of Goods To Be Completed And Subsequently Acquired
Back
Lampiran C5- Bahagian D

SALES TAX REFUND
Licensed manufacturers purchase raw material and components free from sales
tax using the approved C.J. 5 facility from a vendor who has paid sales tax on
such raw material and components at the time of import or purchase from
another licensed manufacturer.
The vendor is entitled to a refund of sales tax paid on such raw material and
components
The application for refund must be made to the sales tax office together with
other relevant supporting documents within
a year from the date of the transaction to which the claim relates

REFUND OF SALES TAX IN RELATION TO BAD DEBT
[s 36,Sales Tax Act 2018]
Registered manufacturer can claim bad debt refund within 6 years from the
payment of sales tax
Bad Debt
• Full payment / Part payment of sales tax irrecoverable due to:-
• (a) Debtor Insolvent
• (b) Payment not received after 6 months from the date of supply
• © Written off in the accounts as bad debts; and
• DG is satisfied that all reasonable efforts have
• been made by such person to recover the
• sales tax by way of reminders, notice and legal actions.

COMPUTATION OF REFUND ON BAD DEBT
Part Payment received from customer
Sales Tax paid - A/B x C
A - Payment received in respect of the sales of taxable goods
B - is the sale value of such taxable goods plus sales tax payable on such taxable
goods; and
C - is the sales tax payable on such taxable goods.
May make a claim for a refund of the whole or any part of any sales tax in
relation to the bad debt within six years from the date the sales tax is paid by
him.

MEANING OF INSOLVENT
(i) Debtor - Individual
 Adjudged bankrupt
 A deed / arrangement is made for the benefit of creditors or a composition /
scheme of proposed arrangement is approved under the Bankruptcy Act 1967
(ii) Debtor - Company
 is ordered by the court to be wound up
 a receiver is appointed and the statement of affairs lodged
 with SSM (assets would be insufficient to cover the
 payment of any dividend in respect of debts

PAYMENT OF SALES TAX, SHORT PAID
OR ERRONEOUSLY REFUNDED
Any sales tax due and payable, surcharge accrued, or penalty, fee or other money
payable, has not been paid by a person; or
Any sales tax due and payable, surcharge accrued, or penalty, fee or other money
payable, after having been paid, has been erroneously refunded to a person,
DG shall demand from the person to pay the sales tax, surcharge, penalty, fee or
other money, or the deficient sales tax, surcharge, penalty, fee or other money, or
to repay the refund erroneously paid to him.
The demand shall be made within six years after giving not less than thirty days
notice in writing.

PAYMENT OF SALES TAX, OVER PAID OR
ERRONEOUSLY REFUNDED
Any person who has overpaid or erroneously paid any sales tax, surcharge,
penalty, fee or other money; or is entitled to the refund may make a claim for
refund in the prescribed form.
A claim for refund shall be made to the DG within one year from the time:-
• (a) such overpayment or erroneous payment occurred; or
• (b) such entitlement of the refund occurred.
The DG may make such refund in respect of the claim after being satisfied that the
person has properly established the claim.
The DG may reduce or disallow any refund.

DRAWBACK
• Drawback of Sales Tax
Section 40 of the Sales Tax Act 2018 allows the drawback of sales tax paid in
respect of goods which are subsequently exported. It is the intention of the
Government to promote export of the locally manufactured products by reducing
the cost of production, thereby enhancing the competitiveness of such products in
the global market.
A person may apply for drawback of sales tax paid in respect
of goods upon exportation of such goods except petroleum.

DRAWBACK
• Generally, drawback of sales tax may be broadly categorised as follows:
• (i) Drawback of sales tax on tax-paid finished goods, either imported or
purchased from a registered manufacturer, which are re-exported;
• (ii) Drawback of sales tax on tax-paid raw material and
components are used in the manufacturing of finished
Goods for export.

DRAWBACK
The DG may allow drawback of the full amount of sales tax paid by a person in
respect of taxable goods which are subsequently exported by the person from
Malaysia. This shall not apply to petroleum.
Drawback shall be claim within 3 months from the date the goods are exported
provided the following criteria has been satisfied:-
(a) Notification in Form K2 – Intention to claim drawback
(b) Goods must be exported within 12 months from which
sales tax paid
(a) Goods in good conditions, same and not been used
(b) Statutory declaration that goods will not be re-landed in Malaysia
(c) Submit to the place where export is made

REMISSION OF SALES TAX
The Minister may remit the whole or any part of the sales tax due and payable
under this Act where he deems fit.
The Director General may remit the whole or any part of the surcharge accrued, or
penalty, fee or other money payable, under this Act where he deems fit.
Where a person who has been granted remission has paid any of the sales tax,
surcharge, penalty, fee or other money to which the remission relates, he shall be
entitled to a refund of the amount of sales tax, surcharge, penalty, fee or other
money which had been remitted.

PERSONS BOUND TO GIVE INFORMATION
Any person having information is duty bound to give information [s 62(1)]
Every person is required to produce any goods, documents, articles used in
sales tax transactions [s 62(2)]
Failure to provide information, goods, documents and articles not in the
national language or English language commits an offence under [s 62(4)]
Upon conviction [s 94]
iii. Both

FAILURE TO PROVIDE ASSISTANCE
[s 64(6), Sales Tax Act 2018]
Senior officer of sales tax office have access to taxable person’s business
premises
Taxable person or any other person present at the place of taxable
person shall provide all reasonable facilities and assistance [s 64(2)]
Failure to provide assistance is an offence
Upon conviction [s 94]
iii. Both

EVASION OF SALES TAX
[s 86, Sales tax Act 2018]
(a) omits from in return,
(b) makes any false statement or entry in any return, claim or
application;
(c) gives any false answer,
(d) prepares, maintains or authorizes the falsification
any book of accounts / invoices / other false records,
or falsifies or authorizes the falsification of any book
of accounts, invoices or records; or
(e) makes / uses / authorizes the use of any fraud, artifice or
contrivance,

EVASION OF SALES TAX
[s 86, Sales tax Act 2018]
Ascertained tax amount [s 86(2)]
First offence
i. 10 times and not more than 20 times ; or
ii. Imprisonment not more than 5 years; or
iii. Both
Second offence
i. 20 times and not more than 40 times ; or
ii. Imprisonment not more than 5 years; or
iii. Both

ASSIST / ADVISE FOR UNDERSTATEMENT
OF SALES TAX
[s 86(4), Sales Tax act 2018
Assist / advise in the preparation of sales tax return, whereby
understating the sales tax return is an offence;
Understatement of sales tax
Upon conviction
i. RM2,000 not more than RM20,000; or
iii. Both

GIVING INCORRECT INFORMATION
Giving incorrect information by the taxable person or through other person
understating the sales tax return is an offence and upon conviction under [s 87,
Sales Tax Act 2018] the taxable person will be liable for the understated sales tax
i. Fine not more than RM50,000, or
ii. Imprisonment of less than 3 years ; or
iii. Both

IMPROPERLY OBTAINING SALES TAX REFUND
Obtaining sales tax refund in relation to sales tax to be charged (Minister Order
[s 10], Bad debt [s 36], and Overpayment [s 39]
Upon conviction
iii. Both; and
iv. 2 times penalty on excess refund

TRANSACTION ON BEHALF OF TAXABLE PERSON
Employee with authorization letter from the taxable person or by way of
submitting prescribed form that has been signed by taxable person [s 90(2)] can
only undertake matters pertaining to refund, remission, exemption and other
matters as approved by DG to act on behalf of the taxable person.
Transaction not allowed or employee act beyond his authorization shall be
convicted under [s 90(3)]
iii.Both;

OFFENCES BY AUTHORIZED AND UNAUTHORIZED PERSONS
An authorized person eg. employee withholds for his own use some information or
demands from any persons an amount in excess of sales tax, submits any false
returns / statement / report / or defrauds any persons / embezzles any money /
uses his position to deal wrongfully with the DG / any other individual commits an
offence as per the sales tax Act 2018.
Unauthorized person collects or attempt to collect sales tax on behalf of a
company is an offence.
Upon conviction they will be liable and fine as follows:-
iii, Both;

OBSTRUCTION
Any person who obstruct, assault or hinder a proper officer of sales tax from
discharging his duties is an offence under the sales tax Act 2018.
Upon conviction
iii, Both;

OFFENCE FOR PERSONS WHO MANAGE THE COMPANY’S AFFAIR
Taxable person (eg. Company / Firm /LLP) and the person who is responsible or
who assist in the management of the company’s affair, commits an offence under
the sales tax Act shall be charged severally and jointly in the same proceeding with
the taxable person and is deemed to be guilty to the offence if the taxable person
is found guilty
Unless the offence can be proven otherwise that the offence was committed
without his knowledge ; or committed without his consent and he has taken
reasonable precautions / due diligence to prevent the offence than he can be
discharged from the offence.

RETURN OF SEIZED GOODS
A senior officer of Sales Tax temporarily return the seized goods to the owner or to
the person with possession / custody / control of the goods or to the person who
is entitled to the goods and subsequently these person fail to surrender the goods
on demand to the senior officer of sales tax commits a crime.
Upon conviction
iii, Both;
The above offence do not apply for guarantor or surety [s71(6]

COMPOUNDING OF OFFENCES
• A senior officer of sales tax has the option of not charging a person in court for
offences committed under Sales Tax Act 2018. The senior officer of sales tax can
offer a compound instead of prosecuting the taxable person
• On payment of the compound, the person, if in custody, shall be discharged and
any goods seized shall be released

FAILURE TO GIVE NOTICE OF WINDING UP
• A registered manufacturer must notify within 14 days from the date of
resolution of the notice of winding up of the company to customs.
• It’s the responsibility of the taxable person to set a sum for sales tax due and
payable before the disposal of any of the asset of the company.
• Pay the sales tax due and payable and failure to do upon conviction [s 97(3)] a
fine of less than RM10,000 shall be imposed.

FAILURE TO NOTIFY DG ON THE APPOINTMENT OF RECEIVER
• A registered manufacturer must notify within 14 days from the date of
resolution of the notice of the appointment of a receiver.
• It is the responsibility of the taxable person to set a sum for sales tax due and
payable before the disposal of any of the asset of the company.
• Pay the sales tax due and payable and failure to do upon conviction [s 9893)] a
fine of less than RM10,000 shall be imposed.

POWER TO TAKE SAMPLES
• Senior officer of sales tax has the power to take samples without any payment
from the taxable person to:-
• Ascertain whether the samples taken is similar to the goods in description
that is liable to sales tax
• Ascertain the sales tax payable; and
• For any other necessary purposes.
• Sample may be further disposed off without returning
• to the taxable person

POWER TO ACCESS PLACES / PREMISE
• Senior officer of sales tax has full and free access to any place or premise of
the registered manufacturer or importer carry on business. [s 64(1)]
• Senior officer of sales tax can enter the place or premise by force and he has
every right to break open the receptacle door or safe. [s 64(4)]
• Other powers [s 64(3), Sales tax Act 2018
• (a)require the taxable person to produce any goods/documents/articles/things
which relating to taxable goods or the taxable person require to keep.
• (b) examine any goods/documents/articles/things and make copies of the
documents.

POWER TO ACCESS PLACES / PREMISE
• © seize and detain any goods/documents/articles/things for evidence;
• (d) require the person to answer any related
• (e) require any container /envelope /other receptacle to be opened;
• (f) open and examine any package/goods/materials at owner’s risk and
expense;
• (g) take samples of any goods [s 63]

POWER TO ACCESS PLACES RECORDED INFORMATION /
COMPUTERIZED DATA
• Senior officer of sales tax has full and free access on all recorded information
stored as computerized data in the computer and any associated apparatus /
material including password encryption code, decryption code, software and
hardware.
• Senior officer can exercise his power under ss 64, 66, 67, and 68;
• Senior officer can inspect the operation of the computer and any associated
apparatus / material and also request for assistance from the taxable person.
[s 65(2)]

POWER TO SEARCH WITH WARRANT ISSUED
BY MAGISTRATE
• Senior officer of sales tax has full and free access to enter place/premises/conveyance to
do a search, seize the goods/documents, articles, and things.
• He has the power to arrest any person in the place/premises/conveyance in whose
possession the goods/documents, articles, and things are found ;or
• Who may reasonably be suspected having concealed / deposited such goods/
goods/documents, articles, and things
• Under [s 66(2)] if necessary the senior officer can break open any outlet/ inner door;
• Remove by force any obstruction to entry;
• Detain any person found until the completion of search of any place, premises or
conveyance.

POWER TO SEARCH WITHOUT WARRANT
Senior officer of sales tax can do a search without a warrant if the process of
obtaining the warrant is delayed and where the evidence are likely to be
removed.
Whenever it appears to the senior customs officer
that there is reasonable cause to believe that there
are concealed or deposited any goods, books,
documents or things which may afford evidence
of an offence against this Act, and if he has
reasonable grounds for believing that by reason
of the delay in obtaining a search warrant,
he may exercise all the powers to issue warrant

POWER TO SEIZE GOODS
Senior officer of sales tax is authorize to seize any
goods/documents/articles/things in which the goods, documents, articles
and things found or used in connection with the offence.

ABETTING AN OFFENCE
Where any person :-
(a) aids, abets, assists, incites or induces any other person to make
or makes on behalf of another person an incorrect return, account,
statement or declaration resulting in a short payment of sales tax
by the person liable for its payment; or
(b) aids, abets, assists, incites or induces any other person to
commit an offence under specified section, such first-mentioned
person shall be guilty of an offence against this Act and shall be
liable to a fine or to imprisonment or both

DISPUTES AND APPEAL
• Any person aggrieved by any decision of the Director General may apply to the
DG for review of any of his decision within thirty days from the date the
person has been notified of such decision provided that no appeal has been
made on the same decision to the Customs Appeal Tribunal or court.
• Where an application for review has been made under subsection (1), the
Director General shall make the review and notify the decision of the review
to the person, where practicable, within sixty days from the date of the receipt
of such application.

DISPUTES AND APPEAL
• Any person aggrieved by any decision of the Director General under
subsection (3) or any other provision of this Act, except any matter relating to
compound, may appeal to the Customs Appeal Tribunal in writing within thirty
days from the date of notification of the decision to the aggrieved person.
• Any sales tax due and payable under this Act shall be paid notwithstanding any
review or appeal has been made under this section. 80

ADVANCE RULING / PUBLIC RULING
Advance Ruling / Public Ruling:
• In order to provide the business sector with greater certainty and predictability
in planning their business activity, a manufacturer may apply to the Director
General for Advance / Public Ruling on the following matters:
Classification of goods;
Whether the business activity undertaken by the manufacturer constitutes
‘manufacture’;
Principles of determination of sales value of goods;
Other matters as prescribed by the Director General

SCOPE OF SERVICE TAX
Service tax is charged on:-
 any provision of taxable services
 made in the course or furtherance of any business
 by a taxable person; and
 in Malaysian
 Not charged on imported services or exported services
 Government collects tax only once from service provider

RATE OF SERVICE TAX
• Fixed at 6% on value of taxable service
• Provision of credit card or charge card services: RM25 imposed upon issuance of
principal or supplementary card and for every subsequent year or part thereof

TAXABLE PERSON
• A service provider who is liable to be registered or registered under the Service
Tax Act 2018
• The service provider provides taxable services in the course or furtherance of
business in Malaysia

TAXABLE SERVICES
Taxable Services
Hotel regardless of room
Insurance/ Takaful
Food and beverage preparation
Club
Gaming
Telecommunication
Pay TV
Forwarding agent

TAXABLE SERVICES
Legal
Accounting
Surveying
Architecture
Valuer
Engineering
Employment agency
Security

TAXABLE SERVICES
Management services
Parking
Motor vehicle service or repair
Courier
Hire and drive car
Advertising
Consultancy

TAXABLE SERVICES
Domestic flight except rural air service
Credit card or charge card
IT services
Electricity (B2C; exceeds 600kWh)

TAXABLE SERVICES
Meanings of terms which attract service tax – Threshold RM500,000
• Hotel: includes Lodging house, Service Apartment, Homestay, Inn, Rest and any
other similar establishment.
• All services including sale of food, drinks and tobacco products.

TAXABLE SERVICES
Insurance & Takaful:
• General insurance or takaful B2B and general insurance or takaful B2C excluding
medical insurance or takaful
• Excludes
• Insuring or takaful coverage of risks relating to the transport of passengers or
goods outside Malaysia
• Insuring or takaful coverage of risks incurred on granting credit relating to the
export of goods, services or investments outside Malaysia
• Insurance contract or takaful certificate to cover risks outside Malaysia All
insurance B2B (Business to Business)
• Service tax charged on actual premium paid

TAXABLE SERVICES
In Service of Food and Beverage Preparation: Threshold RM1,000,000
Restaurant, Café, Catering, Take away, Food truck, Retail outlet,
Hawkers, Food court
 All services including prepared or served food or drinks; and sale
of tobacco products, alcoholic and non-alcoholic beverages.

TAXABLE SERVICES
• Clubs:
Night club,
Private club,
• Golf club and golf driving range
• 1. Night club, dance hall, cabaret
• 2. First, second or third class public house or first or second class beer house
• 3. Health or wellness centre
• 4. Massage parlour or similar places
• All services including sale of food, drinks and tobacco products.

TAXABLE SERVICES
• Gaming
• Betting and gaming provider involving bettings, sweepstakes, lotteries, gaming
machines or games of chance
• Conducting tournaments involving bettings, sweepstakes, lotteries, gaming
machines or games of chance.
• Conducting or allowing the conduct of a card game or any other game by the
casino operator
• Service tax charged on collection, based on formula

TAXABLE SERVICES
• Credit Card – No Threshold
• Provision of credit card or charge card services through the issuance of a
principal credit card, principal charge card, supplementary credit card or
supplementary charge card, whether or not annual subscription or fee is
imposed excluding fuel card and charge card in a closed community e.g.
education institution or a sports club by its students or membersetting and
gaming provider involving bettings, sweepstakes, lotteries, gaming machines or
games of chance

TAXABLE SERVICES
• Transmission and distribution of electricity provider
• Provision of electricity to any domestic consumer excluding for the first 600
kWh for a minimum period of twenty-eight days per billing cycle consumed by
that consumer

TAXABLE SERVICES
• Airline operator licensed under section 35 of Malaysian Aviation Commission
• Act 2015 [Act 771] or air service permit under section 36 of Malaysian Aviation
• Commission Act 2015
• Domestic passenger air transport service and all services in connection with
such services excluding the air transport route as specified under the Rural Air
Services Agreement

TAXABLE SERVICES
• Information technology (IT) services provider
• All types of IT services excluding:
• 1. sale of goods in connection with the provision of IT services;
• 2. IT services in connection with goods or land outside Malaysia or where the
subject matter relates to a country outside Malaysia

TAXABLE SERVICES
• Operator of motor vehicle service or repair centre or provider of motor vehicle
service or repair
• Provision of general servicing, engine repairs and tuning, changing, adjusting
and fixing of parts, wheel balancing, wheel alignment or body repairs including
knocking, welding or repainting of motor vehicles.

TAXABLE SERVICES
• Courier service operator
• Courier delivery services for documents or parcels not exceeding 30 kilograms
each excluding such services for documents or parcels:
• (i) from a place outside Malaysia to a place outside Malaysia;
• (ii) from a place within Malaysia to a place outside Malaysia; or
• (iii) from a place outside Malaysia to a place within Malaysia and includes the
provision of courier delivery services within Malaysia that forms parts of the
service referred to in subparagraphs (ii) and (iii)where the service is provided by
the same person

TAXABLE SERVICES
• Hire-and-drive passenger motor vehicle and hire-passenger motor vehicle
licensed by Land Public Transport Commission, Commercial Vehicles Licensing
Board Act 1987 and Tourism Vehicles Licensing Act 1999
• Provision of hire-and-drive or hire-passenger motor vehicle services including
hire of passenger motor vehicle with or without chauffeur

TAXABLE SERVICES
• Advertising
• Provisions of all advertising services excluding provision of such services for
promotion outside Malaysia
• Architect
• Architectural services including professional consultancy services and other
charges in connection to such services

TAXABLE SERVICES
• Management services excluding such services provided by:
• 1. the developer, joint management body or management corporation to
• the owners of a building held under a strata title; or
• 2. asset and fund managers
• Management services and other charges in connection to the provision of
management services including project management or project coordination

TAXABLE SERVICES
• Consultancy services excluding research and development companies
• Professional consultancy services and other charges
• in connection to such services excluding:
• 1. Consultancy services relating to medical and surgical treatment provided by
private clinics or specialist clinics; or
• 2. consultancy services in connection with goods or land outside Malaysia or
where the subject matter relates to a country outside Malaysia

TAXABLE SERVICES
• Employment agency
• Employment services excluding–
• 1. secondment of employees or supplying employees to work for another
person for a period of time; or
• 2. employment outside Malaysia
Parking operator
• Provision of parking spaces for motor vehicles
• where parking charges are imposed

TAXABLE SERVICES
• Private agency
• Provision of guards or the protection or security of person, property or business
excluding such services to guard or protect the above which is situated outside
Malaysia
• Telecommunication and paid television service provider
• 1. Telecommunication and related services excluding provisions of services to
another telco provider.
• 2. Paid television broadcasting services

TAXABLE SERVICES
• Customs agent
• Services of clearing goods from customs control
• Advocates, solicitors and syarie lawyers
• Legal services and other charges in connection to such services
• Public accountant
• Accounting, auditing, book keeping, consultancy or other professional services
and other charges in connection to such services

TAXABLE SERVICES
• Surveyors including registered valuers, appraisers or estate agents
• Surveying services including valuation, appraisal, estate agency or professional
consultancy services and other charges in connection to such services.
• Professional engineer
• Engineering consultancy or other professional services and other charges in
connection to such services.

REGISTRATION
Threshold: value of taxable service exceeding RM 500,000 (except for Restaurant
– threshold is RM 1 million) for 12 months
• Calculate threshold using historical method or future method by adding 11
months backward or 11 months forward to the current month
• Mandatory and Voluntary registration
• Automatic registration
• Branch/Division: register in the name of branch or division as determined by
the DG
• No group registration – therefore, need to charge service tax on intra-group
services

DECLARING SERVICE TAX RETURN
• Service tax is accounted for on payment received basis
• When the whole or any part of the payment is not received after 12
months from the date of the invoice, account on the day following the
period of 12 months

DECLARING SERVICES TAX RETURN
• Taxable period: every 2 months
• Filing deadline: not later than last day of following month after end of taxable
period
• Submit electronically or by post to processing centre
• Cannot submit by hand personally
• Claim bad debt within 6 years from date goods sold. Repay when payment
received

PAYMENT OF SERVICES TAX
• Electronically
• By cheque, bank draft, posted to SST processing centre
• Late payment penalty on the amount of sales tax not paid:
10 % on first 30 days
15% on the second 30 days
15% on the third 30 days
• maximum 40% after 90 days
• Evidence of payment is based on postal date; not date of cheque clearance

CONTRA
• Allowed to deduct services tax in service tax return for any cancellation and
termination of services or for discounts given or a reduction in premiums
• A mechanism which permits a licensee to deduct from time to time from his tax
return, the amount of services tax paid but subsequently refunded to his
customer by reason of:
• Discounts subsequently given,
• Price reduced or adjusted,
• Transaction is cancelled
• Insurance policies terminated before expiry date
• Insurance premium is lowered due to shorter period of coverage or reduced
coverage.
• Use of contra system must be approved by The Director General of Customs

SPECIAL RULES FOR DA
• Services provided between and within DA - Not subject to Services Tax except as
prescribed by the Minister
• Provisions of services From PCA to DA: Subject to Services Tax except as
• From DA to PCA: Subject to Services Tax
• From DA to SA: No Services Tax

SPECIAL RULES FOR SA
• Services provided between and within SA, not subject to Services Tax except as
• Provisions of services:-
From PCA to SA: Subject to Services Tax except as prescribed by
the Minister
From SA to PCA: Subject to Services Tax
From SA to DA: No Services Tax
From PCA (other than SA) to FZ or LMW: Subject to Services Tax

RECORD KEEPING
• 7 years
• Hard copy or soft copy in Bahasa Malaysia or English
• Mandatory to issue invoices in hard copy or electronically containing
prescribed particulars
• Allowed to issue credit note or debit note containing prescribed particulars
• Records kept in Malaysia, except as permitted by Director General to be kept
outside Malaysia

REFUND OF SERVICES TAX
Refund of Services Tax
• Refund of service tax or penalty overpaid or erroneously paid. Application for
refund must be made within one year of the payment of tax/penalty made.
• The Minister may, by order published in the Gazette and subject to such
conditions as he deems fit, exempt any person or class of persons from payment
of the whole or any part of the service tax which may be charged and levied on
any taxable service provided.
•

REFUND FOR BAD DEBT
• Any bad debt may be refunded if service tax has not been received from
customer within 6 months from the day service tax has been paid provided that:
Customer has been declared bankrupt ( under Bankruptcy Act
1967);
Customer has been placed under liquidation;
Winding-up order has been placed on customer by court or
voluntary liquidation is applied for.

INVOICES, RECORDS, RETURNS AND ASSESSMENT
Refund for Bad Debt
• Licensee has filed an application in court for debt owed;
• Licensee has applied for bankruptcy proceedings in court against customer for
debt owed for taxable services provided;
• Application for refund of tax paid on bad debt may be made within a period of
6 years from the date tax was paid
• A licensee who wishes to use such facilities must get approval from the State
Customs Director

INVOICES, RECORDS, RETURNS AND ASSESSMENT
Invoices and receipts
• Every taxable person who provides any taxable service shall, unless otherwise
prescribed by regulations, issue an invoice and a receipt in the national language
or in the English language [s 21(1)] to the customer in respect of the transaction
and shall state in the invoice and receipt the amount of service tax payable
separately from the charges for the taxable service provided
• Non-Compliance – [s 21(4) , Upon Conviction
• i. Fine less than RM30,000 ii. Imprisonment less
• than 2 years, or iii. Both

DUTY TO KEEP RECORDS
[s 24, Service Tax Act 2018]
• (1) Every taxable person shall keep complete and true records written up to
date of all transactions which affect or may affect his liability to sales tax,
including the following records:
• (a) all records of sales of taxable goods by or to that taxable person including
invoices, receipts, debit notes and credit notes;
• (b) all records of importation and exportation of taxable goods; and
• (c) all other records as the Director General may determine.
• (2) Any record kept under this section shall be:-
• (a) preserved for a period of seven years from the latest date to which the
record relates;
• (b) in the national language or English language; and

DUTY TO KEEP RECORDS
[s 24, Service Tax Act 2018]
• (c) kept in Malaysia, except as otherwise approved by the Director General.
• (3) Record is in an electronically readable form, the record shall be kept in such
manner as to enable the record to be readily accessible and convertible into
writing.
• (4) Record is originally in a manual form and is subsequently converted into an
electronic form, the record shall be retained in its original form prior to the
conversion.
• (5) A copy of the record shall be admissible in evidence in any proceedings to
the same extent as the record itself.
• Non- Compliance [s 24(6), Sales Tax Act 2918, Upon Conviction
• i. Fine less than RM50,000 ii. Imprisonment less than 3 years, or iii. Both

FURNISHING OF RETURNS
Every taxable person shall within last day of the following month submit the return
in the prescribed form setting forth the aggregate amount of the proceeds
received during that taxable period in respect of charges levied or collected for
providing taxable service, the amount of service tax payable and such other
particulars as may be required Service Tax 2018 by the Director General; and the
return shall be verified by declaration in the prescribed form
Failure to submit return – [s 26(6)(a), Service Tax Act 2018 upon conviction
Incorrect return [s 26(6)(a), Service Tax Act 2018 -
i. Fine less than RM50,000 ii. Imprisonment less than 3 years, or iii. Both

COLLECTION, RECOVERY AND REFUND AND
REMISSION
When Tax Becomes Due and Payable
• The service tax chargeable under this Act shall be due at the time when
payment is received for the taxable service provided to the customer by the
taxable person.
• Where the whole or any part of the payment for any taxable service provided by
the taxable person is not received from the customer within a period of twelve
calendar months from the date of the invoice for the taxable service provided,
service tax shall be due on the day following that period of twelve calendar
months.

RECOVERY OF TAX
Any service tax due and payable and any penalty or surcharge payable under this
Act may be recovered as a civil debt due to the Government

JOINT AND SEVERAL LIABILITY OF DIRECTORS
Where service tax, penalty or surcharge is due and payable by--
(a) a company;
(b) a firm; or
(c) a society, an association or other body of persons, the directors
of such company or the partners of such firm, shall together be
jointly and severally liable for the service tax, penalty or surcharge

RETURN OF SERVICE TAX OR PENALTY OVERPAID OR
ERRONEOUSLY PAID
• Any service tax or penalty has been overpaid or erroneously paid under this Act,
DG shall approve the refund of the service tax or penalty that was overpaid or
erroneously paid.
• Provided that--
(a) no such refund shall be allowed unless a claim in respect of it is
made in the prescribed form within one year after the overpayment
or erroneous payment was made;
(b) the Director General may reduce or altogether disallow any
refund due under this section to the extent that the refund would
unjustly enrich the claimant

DEDUCTION FROM RETURN OF REFUNDED
SERVICES TAX
• The Director General may approve, subject to such conditions as he may deem
fit to impose, an application by any taxable person to deduct from time to time
from his tax return referred to in subsection 12(1) the amount of Services Tax
paid but subsequently refunded to his customer by reason of
(a) cancellation of taxable service;
(b) termination of taxable service; or
(c) such other reasons as may be approved by the Director General

DEDUCTION FROM RETURN OF REFUNDED
SERVICES TAX
• The taxable person shall make the deduction within one year after the payment
was made, or such extended period as may be approved by the Director General.
• Any person who is or has ceased to be a taxable person may make a claim to the
Director General for a refund of the whole or any part of the service tax paid by
him in respect of taxable service if--
(a) the service tax has been paid by such person.
(b) the whole or any part of the service tax payable to such person
has been written off in his account

PERSONS BOUND TO GIVE INFORMATION
• Every person having information about any matter into which it is the duty of
the customs officer to inquire shall upon being required by him to do so, give
such information.
• Every person required by the proper officer to produce a document or other
thing which is within the power of such person to produce, and which is a
document or thing required under this Act or a document or thing used in any
transaction relating to service tax or a document or thing into which it is the
duty of the customs officer to inquire under this Act, shall produce such
document or thing

ACCESS TO BUILDING, PLACES. BOOK, ETC.
• Any customs officer shall for the purposes of this Act at all times have full and
free access to all buildings, places, books, data, documents or other records for
the purpose of ascertaining the amount of service tax to be payable by any
person under this Act, and may, without fee or reward, inspect, copy or make
extracts from any such books, data, documents or other records.
• Any proper officer may take possession of any such books, data, documents or
other records where in his opinion:-
(a) the inspection, copying or extraction thereof cannot reasonably be
performed without taking possession thereof;

ACCESS TO BUILDING, PLACES. BOOK, ETC.
(b) the books, data, documents or other records may be interfered
with or destroyed unless possession thereof is taken; or
(c) the books, data, documents or other records may be required as
evidence in proceedings for an offence against the Act or in
proceedings for the recovery of Service Tax, penalty, surcharge or
other moneys payable under this Act

MAGISTRATE ISSUE SEARCH WARRANT
Whenever it appears to any Magistrate, upon written information upon oath and
after any inquiry which he may think necessary, that there is reasonable cause to
believe that in any dwelling house, shop or other building or place or on board any
vessel or aircraft, there are concealed or deposited any books, documents or things
which may afford evidence of an offence against this Act, the Magistrate may issue
a warrant

POWER TO ARREST
Any senior officer of customs and proper officer may arrest without warrant--
(a) any person found committing or attempting to commit or employing or
aiding any person to commit or abetting the commission of, an offence against
this Act;
(b) any person whom he may reasonably suspect to have in his possession any
books, documents or things liable to seizure under this Act;
(c) any person whom he may reasonably suspect to have committed an offence
against this Act

OFFENCES
• Failure to comply with notice, etc.
• Without prejudice to any other liability incurred under this Act, any person
who:-
(a) fails or refuses to comply with the requirements of the Act;
(b) carries on business at any place or premises not specified in the licence.
(c) fails or refuses to produce any book, document or thing for the examination
or retention by the proper officer in accordance with the requirements of this
Act;
(d) fails or refuses to give correct information or refuses to give any
information which he is required to give relating to service tax

OFFENCES
• Penalty for charging or collecting service tax by non-taxable person
• No person shall charge or collect from any person any sum of money for
the purpose of paying service tax levied under this Act in respect of any
service provided by him or on his behalf unless he is liable under this Act
to pay such service tax
• Any person who contravenes the provisions of this section shall be guilty
of an offence against this Act and shall be liable on conviction to a fine or
to an imprisonment or to both

OFFENCES
• Penalty for evasion of service tax
• Any person who willfully with intent to evade or to assist any other person to
evade service tax--
• omits from a return made under this Act
• prepares or maintains or authorizes the preparation or maintenance of any false
book of accounts, false invoices or other false records, or falsifies or authorizes
the falsification of any book of accounts, invoices or records; or

OFFENCES
• makes use or authorizes the use of any fraud, art or contrivance,
• shall be guilty of an offence against this Act and shall be liable on conviction to a
fine or to imprisonment or to both.
(i) destroying, damaging, erasing or altering other data stored in
that computer; or
(ii) interfering with, interrupting or obstructing the lawful use of
that computer, or the data stored in

GENERAL PENALTY
General Penalty
Any omission or neglect to comply with and any act done or attempted to be
done contrary to the provisions of this Act or the regulations, and in respect
of which no penalty is expressly provided shall be an offence against this
Act and the offender shall be liable on conviction to a fine to imprisonment
or both

OBLIGATION OF SECRECY
• The name and address of an informer and the substance of the information
received from an informer shall be kept secret and shall not be disclosed by any
proper officer or any person who in the ordinary course of his duties comes into
possession of or has control of or access to such information to any person
except the designated proper officer authorized by the Director General.
• Any person who contravenes shall be guilty of an offence against this Act and
shall be liable on conviction to a fine or to imprisonment or to both

PROTECTION OF INFORMERS FROM DISCOVERY
• No witness in any civil or criminal proceedings under this Act shall be
obliged or permitted to disclose the name or address of an informer, or
the substance of the information received from him, or state any matter
which might lead to his discovery.
• Any informer is named or described or which might lead to his discovery,
the court shall cause all such passages to be concealed from view or to
be obliterated, but only to the extent necessary to protect the informer
from discovery

COMPOUNDING OF OFFENCES
• Any senior officer of customs may compound any offence which is
prescribed to be a compoundable offence by accepting from the person
reasonably suspected of having committed such offence.
• Nothing contained in this Act shall prevent the prosecution, conviction and
punishment of any person according to the provisions of any other written
law for the time being in force in Malaysia or any part thereof:
• Provided that no person shall be punished more than once for the same
offence

COURT ORDER
Where any person is found guilty of an offence, the court before which that
person is found guilty shall order that person to pay to the Director General
the amount of service tax due and payable, or any penalty payable under
this Act, if any, as certified by the Director General and such service tax or
penalty shall be recoverable in the same manner as a fine

DISPUTES AND APPEAL
• Where any person disputes the decision of a proper officer acting in the
course of duty, he may appeal therefrom to the Director General whose
decision on such dispute shall, be final.
• Any person aggrieved by a decision of the Director General may within thirty
days after being notified of such decision—
(a) in cases relating to the refund of the service tax, appeal to the court; or
(b) in other cases and matters, appeal to the Minister, whose decision shall
be final and not be subject to review in any court

ACCOMMODATION
• SCOPE OF SERVICE TAX ON ACCOMMODATION
• Under Group A, the service provider refers to an operator of:
• (i) Hotels;
• (ii) Inns;
• (iii) Lodging House
• (iv) Guest House;
• (v) Service Apartment;
• (vi) Homestay; and
• (vii) Similar establishment.

ACCOMMODATION
SCOPE OF SERVICE TAX ON ACCOMMODATION
• The provision of services by such service provider, includes all services provided in
or within the accommodation premises and provision or sale of food, drinks and
tobacco products.
• Provision of services such as banquet facilities, rental of office space, recreational,
and theme park are also included in this category.

ACCOMMODATION
• SCOPE OF SERVICE TAX ON ACCOMMODATION
• “Similar establishments” refer to premises which have the characteristics similar to
hotels, inns or boarding houses.
• It includes premises which provide furnished sleeping accommodation, with or
without board or facilities for the preparation of food, and which are used by or
held out as being suitable for use by visitors or travellers.
• Similar establishments also include hostels guest houses, bed and breakfast rest
houses, resorts, chalets and lodging houses, private residence clubs, service
apartments and home-stay.

Retention fees/ Cancellation fees
• Does not include premises that are used to provide accommodation provided by:
• (i) The Federal Government, State Government, statutory body, local authority, or
private higher educational institutions registered under the Private Higher
Educational Institutions Act 1996 as a facility to any person for educational, training
or welfare purpose;
• (ii) An employee as a facility to his employees; and
• (iii) A religious or welfare body for the purpose of religious or welfare activities and
not for commercial purpose and registered with the Registrar of Societies Malaysia
or under any written law governing such body.

Service Tax Treatment on Similar Establishments
• Services provided by premises similar to hotels, motels, inns or boarding houses
that attract service tax are as follows:
(i) Home-stays
• Rental on home-stays is a taxable service is subject to service tax.
(ii) Service apartments
• Service apartments used as a lodging or holiday accommodation rented out with
central management, multiple occupancy, short term stay offering services such as
cleaning, laundry, telephone, utilities, 24-hour security, swimming pool facilities,
landscape and other common facilities are subject to service tax.

(iii) Camping ground
• These premises operate differently than hotels and the like. Guests may pay
to stay in a hut, or a permanent cabin on the site. Alternatively, they may pay
a fee to park their own tents or vehicles on the site.
• All these services are subject to service tax. The services or rental of any
associated facilities for example camping facilities such as jungle lodges,
tents, camp beds and security service are also subject to service tax.

Related services
Related services which may also be provided by the hotel operator that attract
service tax are as follows:
(i) Admission fee to the theme park
• Admission fee to a theme park in a resort or hotel is subject to service tax.
Service tax is to be levied on the net ticket price, excluding entertainment duty.
(ii) Free tickets and complimentary rooms
• Free tickets or complimentary rooms provided with no charge offered to the
guest in at a resort, hotel or similar establishments is subject to service tax.

(iii) Complimentary rooms let out under promotional program
• (a) Complimentary rooms let out under promotional program (e.g. loyalty program)
to attract customers are allowable. Complimentary rooms are to be treated as a
discount and therefore not subject to service tax.
• (b) Complimentary rooms given as part of a package charged by the service provider
(e.g. hotel) in the form of wedding package, seminar, dinner and other F & B
package is not subject to service tax.
• (c) Complimentary rooms are given other than in paragraph (ii) above, it is subject
to service tax at the open market value.

• (iv) Complimentary rooms put up for private use for business associates
• Such complimentary rooms are subject to service tax. Service tax is chargeable
based on the open market value.
• (v) Events/ Conferences/ Meetings/ Seminar Package
• Premises in hotels and the like are commonly offered as avenue to hold events/
conferences/ meetings/ seminars. The services are normally offered as a package
(example: rental of premises, food and beverages, facilities to be used) and are
subject to service tax.

Other services that attract service tax:
(vi) Wedding Package
Wedding package offered by the hotel includes breakfast, buffet, meals, ancillary
services such as floral decorations, the services of the toastmaster and room for bridal
ceremony and bridal party.
The whole wedding package is treated as a single taxable service and subject to service
tax.
(vii) Hotel club facilities
Hotel’s club membership fees are subject to service tax. Hotel’s club facilities provided
such as gymnasium and swimming pool are subject to service tax.

Other services that attract service tax:
(viii) Other services that attract service tax:
(a) Rental space within the hotel for display of cabinets and advertising panels;
(b) Rent received from shops situated in hotel’s premise;
(c) Hire of a sports or games room;
(d) Hire of sports equipment and providing coaching sessions;
(e) Hire of rooms for trade sales and exhibitions;
(f) Usage of business center;
(g) Usage of health center/ spa;
(h) Car jockey services;
(i) Outdoor catering; and
(j) Parking fees when charged separately.

Other services that attract service tax
Deposit or Booking Fees
If the deposit or booking fee forms part of payment, it is subject to service tax. If it is
not part of the payment, it is not a consideration and not subject to service tax.
Forfeited deposits/ booking fees is not considered as a service, but as a penalty and
is therefore not subject to service tax.
Retention fees/ Cancellation fees
Retention fees are paid to reserve an accommodation for future use and considered
as an advance payment and subject to service tax. The Cancellation fees are
regarded as compensation and not subject to service tax.

REGISTRATION AND RESPONSIBILITY OF REGISTERED
PERSON
• A service provider whose total turnover for the period of 12 months exceeds the
prescribed threshold of taxable services is required to be registered under the
Service Tax Act 2018.
A registered person is responsible to:
• (i) Charge service tax on taxable services,
• (ii) Issue an invoice and receipt to the customers in respect of any transaction
relating to the provision of taxable services,
• (iii) Submit service tax return SST-02 Form electronically and pay service tax before
the due date,
• (iv) Keep proper records

ADVERTISING SERVICES
• Overview af an Advertising Industry
• For the purpose of this guide: (i) Advertising is the business of producing and
promulgating an advertisement. Such advertising activities generally involve
advertiser, media owner or advertising agency.
• (ii) Advertisement means an announcement or a notice to promote any product or
services, or any other purpose and conveyed by or through any signage, image or
sound disseminated through any medium for advertising purposes.
• (iii) Advertiser is a person who place advertisements on his product,

services, events or announcement in order to target his customers or audience.
• (iv) The advertising agency is a person who provides any services related to
advertising such as creative work, graphics and writing, design, creation of
advertising campaigns and advertising placement includes selling of advertising
space in any communication medium such as magazines, newspapers, billboards,
radios and televisions, or other media.

• (v) The media owner is a person who owns the right of medium for advertisement.
Media owners refer to the owner of the respective media such as: (a) TV station
• (b) Print media (e.g. newspaper, magazine)
• (c) Radio
• (d) Outdoor advertising (e.g. billboards, bus panels, taxi panels)
• (e) Telecommunication (Mobile advertising through SMS, MMS and etc;)
• (f) Online advertising through internet

TREATMENT OF SERVICE TAX ON ADVERTISING
SERVICES
• Any advertising services provided by advertising agency, media owner or any
person who is a taxable person to an advertiser to place any advertisement for
promulgation of products, services, events or announcements in Malaysia on any
communication platform. The communication platform is as below:
• (i) The advertisement for hardcopy print such as newspapers, magazines or etc.;
• (ii) The advertisement for outdoor advertisements such as bus panels, taxi panels,
bus stop shelters, billboards and etc.;
• (iii) Digital signage and floor graphic;

TREATMENT OF SERVICE TAX ON
• (iv) Mobile advertisement through sms,mms and etc;
• (v) The advertisement for broadcasting in television and radio; or
• (vi) The advertisement for online advertising via internet.
• is subject to service tax at the rate of 6% excluding any advertising services for
promotion outside Malaysia.
• In advertising industry, advertising agency will propose the best combination of
media including placement of an advertisement, advertising method, design,
graphic, photography and etc. for advertiser to convey the message and achieve
their marketing campaign objective

SERVICES
• The value of advertising services is based on the actual selling price chargeable to
the advertiser including all costs incurred in typesetting, formatting, printing and
necessary technology to have the advertisement fitted into any medium of
communication.
• Usually, media owners or advertising agency who is a registered person and provide
advertising services shall charge service tax on the actual price paid or to be paid
service tax by the advertisers.

SERVICES
• The calculations of service tax is as follows:
• Advertisement selling price = RM 1,000
• Add: Service Tax @ 6% = RM 60
• Total amount payable = RM 1,060
• The total value shall be stated in invoice is RM 1,060
• For the purpose of service tax, any advertising agency or media owner who provide
advertising services which has been prescribed under Group I, First Schedule of
Service Tax Regulations 2018 is a taxable services and subject to service tax.

Sales and service Tax Act 2018

Sales and service Tax Act 2018

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Sales and service Tax Act 2018

Similar to Sales and service Tax Act 2018 (20)

Recently uploaded

Recently uploaded (20)

Sales and service Tax Act 2018