Service tax is a consumption tax levied and charged on any taxable service provided by any taxable person. The Service Tax Act 1975 applies throughout Malaysia excluding Langkawi, Labuan, Tioman and the Joint Development Authority (JDA).
For the purposes of the Act, the Free Zones shall be deemed to be outside Malaysia.
Rate of tax
The rate of service tax is 6% of the price, charge or premium of the taxable service with effect from 1 January 2010. Prior to 1 January 2011, the rate of service tax was 5%.
The rate of service tax on the provision of credit card or charge card services effective from 1 January 2010 is as follows:
- RM50 per year on the principal card; and
- RM25 per year on the supplementary card.
The service tax is chargeable on the date of the issuance of the card and every 12 months thereafter or part thereof after the issuance of the card or on the date of the renewal of the card and every 12 months thereafter or part thereof after the renewal of the card.
Licensing under the Act
Any taxable person who carries on a business of providing taxable service must apply for a license.
The Service Tax Act 1975 also provides for voluntary licensing whereby any person who is not required to be licensed can also apply for a service tax license if he:
- provides taxable service; or
- is intending to carry on a business of providing taxable services.
“Person” includes an individual, a firm, a society, an association, a company and every other juridical person.
No fee is payable to Custom Department for the issuance of a license.
Taxable person and taxable service
Taxable person is defined under the Service Tax Act 1975 as any person who is prescribed to be a taxable person and taxable service as any service which is prescribed to be a taxable service under the Second Schedule of the Service Tax Regulations 1975.
Payment of service tax
Service tax is due when payment is received for taxable services rendered. If payment is not received within 12 calendar months from the date of issuance of invoice, the tax is due on the day immediately after the expiry of the 12-month period. (Means you have to pay even though the balance is not collected by you!)
Any service tax that falls due during the taxable period, which is 2 calendar months, is payable to the Customs authorities within 28 days after the end of the taxable period.
Penalty for late payment
Where any payment of service tax is not paid to the Customs authorities within the stipulated period, a mandatory penalty of 10% will be imposed on any unpaid amount. If the service tax, which is due and payable, remains unpaid for more than 30 days, the penalty will be increased by a further 10% for every succeeding 30 days or part thereof, subject to a maximum of 50%.
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Can service tax 6% be imposed on organization such as Persatuan Teochew?
Pls advise
Yes, Malathy, when a organisation acquire services from any auditors/lawyers or any professional firms, they will be charged 6% service tax on top of fees billed.
Service tax applicable to services rendered to an overseas company?
E.g. a legal firm provide consultation to the overseas company on drafting an agreement between local Malaysian company & the overseas company.
Thanks.
My small business based overseas will do environmental consultancy work on the ground in Sarawak this year, up to maybe 100000MYR, which I will be charging to a new Malaysian-registered company. That company will be paying tax on my services in Malaysia. Should I be billing a service tax to the company, and do I need to be registered with Malaysian authorities myself?
May I known whether a secretarial and accounting business need to pay service tax?
Yes, cass, all professional firms (including secretarial & accounting businesses) are required to charge service tax on top of the services provided. All service taxes collected must be remitted to Custom Departments.
Can the service tax impose on the reimbursement of staff claims beside consultancy services provided?
No, Tan, no service tax will be imposed on the reimbursement of staff claims.
I wish to enquire, i run a photocopy cum basic computer printing centre, do i fall in the catogery of service tax? if yes, but by annual sales is hardly RM70k to RM80k, do i need to apply for a license?
A mandatory penalty of 10% will be imposed on any unpaid amount. If the service tax, which is due and payable, remains unpaid for more than 30 days, the penalty will be increased by a further 10% for every succeeding 30 days or part thereof, subject to a maximum of 50%.
Late payment of Service tax = Rm 100.00
1st 30 days 10% = Rm 100.00 + 10%
2nd 30 days 10% = Rm 110.00 + 10% or Rm 100 + 10% + 10%
Pls Advice, Thanks.
Hi, may i know if im billing a company for labor supply to assembly all the metal door’s parts & accessories, do i need to pay sales tax?