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:

  1. RM50 per year on the principal card; and
  2. 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:

  1. provides taxable service; or
  2. 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%.

56 COMMENTS

  1. Can service tax 6% be imposed on organization such as Persatuan Teochew?
    Pls advise

  2. 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.

  3. 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.

  4. 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?

  5. 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.

  6. Can the service tax impose on the reimbursement of staff claims beside consultancy services provided?

  7. 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?

  8. 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.

  9. 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?

  10. Does a IT service company (i.e., consultancy & implementation service) need to bill her clients for service tax?

  11. Dear Sir
    What about tax exempted NGO?
    Should it pay the service tax to an audit firm?
    For your information, the NGO is exempted from
    road tax licence
    and insurance service tax.

    Thank you

  12. Does a IT service company need to bill her clients for service tax with the following services category:
    1) Project management and consultancy
    2) System development and implementation service
    3) Selling of software license

    Pls advise, thanks!

  13. our company is provide telecommunication training to company, may i know whether this will subject for 6% service tax?

  14. May I Know a Vessel Dockyard Company on building and repairing of all kind of Marine Vessels need to bill her clients service tax?

    Please advise, thanks.

    • Hi RWFK, repairing service is subject to service tax but not for building vessel.

      However, if the repairing works are conducted outside Malaysia then it will be considered not subject to service tax. (Exporting services is not subject to service tax)

  15. for hotel business, even the turnover is less than 150,000.00 ,also need to register the service tax?

    how to pay the service tax? every 2 months for payment,which means Jan & Feb,and March & April?

    when is the day to pay for the every 2 months tax?

    • Hi Jane, the guideline for hotels is as follows:

      Any person operating 1 or more hotels, any 1 hotel having more than 25 rooms

      (excluding hostel for pupils or students of educational institutions and hostels established and run or maintained by religious institutions or bodies)

      Yes, every two months and depends when do you apply. It depends on the month when you are getting license, then every 2 months from then. It can be Jan & Feb, Mar & Apr and also can be Feb & Mar, Apr & May.

      All service tax collected must be remitted to Customs Department on or before the 28th day of the month after the 2-month period.

  16. Hi angelina,for interior design company yearly turnover 250,000 – 450,000 provide a)design services to clients, b) design & construct the interior fitting outwork, need to register for service tax?

  17. Hi Angelina, supposing my company managed a staff on behalf of our related company to provide services to the group. We charge the related company a managing fee on monthly basis. I understand that 6% service tax ought to be imposed on the management fee. What about reimbursement of salary costs? We don’t markup on the salary costs. We merely recovering the cost of maintaining the staff in our company.

    Please advise.

  18. We are an telecommunication solution supplier company. We normally supply telecommunication equipments and related installation services. Exceptionally, we are asked to provide telecommunication solution consultancy services to a customer. Do we need to register/bill ST to our customer for this service?

    Thank you for your help,

  19. may i know whether artist booking fee and creative design fee is subject to 6% service tax?

  20. Hi Angelina,
    Thanks for your advice. we are an event company, understand event management fee is subject to service tax, then can I conclude that professional fee and consultancy service is also subject to service tax?

  21. Hi, if co. A not holding share in co. B but has total control of co.B(having common director), is it eligible to be treated as company within a group of companies, and any taxable service shall not be a taxable service?

    • Hi Chloe, having same directors of two companies can not be treated as related companies, any services performed among are still subject to service tax.

  22. Hi, I’d like to understand in cases where a sub-con bills the main-con for taxable services, and the main-con bills the client for all the services rendered. For example, a sub-con bills the main-con RM1,000 with a service tax of RM60. If the main-con bills the client, including it’s taxable service input, a total amounting to RM1,500 with a service tax of RM90, how can we go about avoiding the Customs collecting RM150 (RM60+RM90). Is there a procedure where the sub-con can apply for exemption from billing the main-con, and how can one go about doing so? TQ.

    • Hi Tan, there is no way that the sub-con or main con to exempt from charging service tax.

      Our clients are also facing the same situation and we have obtained confirmation from the Custom Department on the above situation.

      All companies providing taxable services are required to charge service tax, regardless whether the other party is related company or government body/department.

  23. Hi
    Is service tax applicable in case of ,Malaysian lawyers providing consultancy service from Malaysia to an overseas co. wrt its parent Malaysian co. as regards some confirmation.
    E.g. Parent co.”A” in Malaysia, group co. “B” in Asia, Lawyer “C” in Malaysia & services rendered in Malaysia (no visit to country “B”) to whom bill is raised. Is service tax applicable

  24. Hi,

    If a film/drama production house found sponsorship to partly funds its production cost or promotion activities, does this sponsorship subject to service tax? Thanks.

  25. In a market research firm, if the Malaysian client commissions a research on Thailand. Is that fee subject to service tax?

    Does it make a difference if the client is based on overseas?

    Will it differ if:
    – we carry the research out of Malaysia using Malaysian staff to do telephone interviews
    – we outsource the work to firms/staff based in Thailand

    Thanks in advance!

    • Hi Chooi, it involves technical advices. I suggest you to consult your company’s tax agent on the matter. If you require our service on this matter, you are welcome to contact our tax director, Mr Foo, at 03-77297018 on the services and fees involved on the case. Thank you.

  26. I heard fr some one that, a sub consultant should not charges the service tax to main consultant to avoid touble tax charged on client ?
    Is that true ? I’m work in a Civil engineering consultant firm. For all those expenses incure in a project eg: travelling, printing & stationery are chargeable or not. How about authorities submission fees?
    Thank for your attention.

    • Hi Mandy, it is not true. All consultant firms must charge service tax on their services whether provided to end users or another consultant firms.

      Service tax is single-stage tax levied at only one stage of the supply chain and it can not be exempted at any situation.

      Reimbursed expenses such as travelling, printing & stationery, authorities submission fees, etc are not subject to service tax as these are not services provided for.

  27. A Joint Management Body is seeking to refund all the 6% Government Service Tax from his previous Insurer as her current insurance agent has informed them that they as a JMB is exempted from paying this 6% Service Tax.

    The said body is managing an office building with retail outlets on its 3 storey podium block. It is not a condominium or private residential property. However, we were asked by the JMB to refund all these past years 6% service tax. Is this correct? Wisma MPL JMB being a commercial property is exempted from paying the 6% Government Service Tax on their premium? We understand that residential properties do not pay this, but commercial properties, are they exempted? Would like to have your comments

    • Hi Koh, let me try to understand the situation:

      JMB is asking the refund from the insurance agent for the service tax charged on the insurance premium.

      Let me explain something about JMB:

      Joint Management Body is a body formed by the owners of an apartment/condo to conduct the maintenance & operations of an apartment/condo and to collect maintenance charges & sinking fund from the owners.

      JMB is merely collecting fund (maintenance charge & sinking fund) from the owners. So JMB should not charge 6% Service Tax for the maintenance charges from the owners.

      However, JMB is no different as a company that JMB will be charged service tax for whatever taxable services provided by the suppliers/sub-con/insurance agent.

      As such, it is RIGHT for insurance agent charging service tax to JMB as insurance premium is taxable services. JMB is legally required to pay the service tax.

      No one can claim that they are exempted from service tax under Service Tax Act.

  28. Can a fruit juice shop charge service tax? No displaying the
    Certificate issued by custom. Where can we check or complain of
    this type of cheating?

    • Juliet, all companies charging service tax shall display its certificate (issued by Customs Department) at the promises.

      Legally, you can request to see the certificate before making any payment.

      If they are unable to show you the certificate, you can request not to pay the service tax as stated in the bill.

  29. Hi, may i check with you should a company pay the 6% service fee on the referral commission if our company refer the client in Singapore (Buyer) to buy a property from a developer in Malaysia?

    Should the Malaysia company deduct the company (foreign company) 6%?

    Thank you for your attention.

  30. Hi Angelina
    1) Is providing services/maintenance for machinery subjected to Service Tax ?
    2) Is providing IT Services/maintenance & Consultancy subjected to Service Tax ?
    If yes, how is the penalty for late/non payment like ?
    Thanks in advance.

  31. Repeat Question
    Hi angelina,for interior design company yearly turnover 250,000 – 450,000 provide a)design services to clients, b) design & construct the interior fitting outwork, need to register for service tax?

    • Designing services, yes. Construction works, no.

      You will need to determine the total fees for designing services if you want to clarify if your company is subject to Service Tax requirements.

  32. Hi, may I know for a company main activity is servicing and repairing factory machinery with annual turnover more than RM300k need to register for service tax?

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