With effect from 1st January 2019, service tax will be imposed on the imported taxation services into Malaysia (Section 7 of Service tax Act 2018 amended under Finance Act 2018) .
Imported Taxable Service means any Taxable Service acquired by any person in Malaysia from any person who is outside Malaysia (new definition under Section 2 of Service tax Act 2018).
In view of foregoing, all businesses (regardless of Sales & Service Tax (SST) registrant or non-SST registrant) are required to self-account for and pay service tax to the Royal Malaysian Customs Department (Customs) for imported taxable services
|(Section 26A(1) of Service tax Act 2018 amended under Finance Act 2018) :
26A. (1) Any person other than a taxable person who, in carrying on his business, acquires any imported taxable service shall—
The standardized tax treatment for services imported and locally supplied by service providers are to ensure fair competition between overseas and local providers of services. As a result, service tax will be borne by Malaysian business (regardless of Sales & Service Tax (SST) registrant or non-SST registrant) for imported taxation services.
When is the Service Tax due for imported taxable services?
At the time when the payment is made or invoice is received for the imported taxable service, whichever is the earlier (Section 11 of the Service Tax Act 2018 amended under Finance Act 2018).
Declaration and payment of imported services
SST registrant (business)
– to account for the service tax due for imported taxable service according to the business service taxable period
– to submit SST-02 Form and pay SST not later than the last day of the following month after the taxable period ended.
Non-SST registrant (business)
– to account for service tax due for imported taxable service
– to submit SST-02A Form and pay SST not later than the last day of the month following the end of the month in which the payment on the service has been made to service provider or invoice is received by business, whichever is earlier.
Manual for online declaration and payment.
All business owners can declare their imported taxable services online via MySST portal and make online payment via FPX system. Kindly click the links below.
|1.||User manual for online declaration of imported taxable services by a registered person (via Form SST-02)|
|2.||User manual for online declaration of imported taxable services by a person other than a taxable person (via Form SST-02A)|
Late Payment Penalty
|Number of Late Days||Penalty Rate|
|First 30 Days||10%|
|Next 30 Days (i.e. 31 – 60 days)||+ 15%|
|30 Days Thereafter (i.e. 61 – 90 days)||+ 15%|
Prosecution for the offence may be instituted after the expiry of the period of 90 days.
- Section 27 of the Service Tax Act 2018 empowers Director General of Customs to raise best judgment assessments (i.e. any service tax sum raised by Customs based on Customs best judgment and requesting businesses to pay) if any businesses acquire imported taxable services but “fail to furnish a return” or “furnish an incomplete/ incorrect return”.
- “Failure to submit the return (SST 02 / SST 02A Form) by the due date” or “failure to pay the service tax by the due date” or “furnishing the incorrect return” commits an offense and shall on conviction, be liable to fine not exceeding RM50,000 or imprisonment for a term not exceeding 3 years or to both under Section 26 of the Service Tax Act 2018.
- The company is required to pay “Withholding Tax (WHT) to the Inland Revenue Board (IRB)” in addition to the aforesaid “Service Tax paid to Customs” if the services provided fall within the ambit of WHT scope under Income Tax Act 1967.
e.g. 1 : Advertising services rendered by foreign companies such as digital marketing providers from Google, Facebook and etc. are imported services subject to service tax and also fall within the scope of WHT.
e.g.2: Software downloaded / delivered by email from software provider is classified as Imported Taxable Service and subject to service tax and WHT unless acquiring the software that comes in a CD format which will be considered as goods and hence not subject to service tax and may be out of scope of WHT.
Please click Malaysian Withholding Tax for further information.
Disclaimer: All information above are presented for reference purposes & you are advised to contact the Customs or IRB for further information or your company’s appointed tax agent for more details.