{"id":6422,"date":"2020-03-12T21:43:29","date_gmt":"2020-03-12T13:43:29","guid":{"rendered":"http:\/\/www.nbc.com.my\/blog\/?p=6422"},"modified":"2020-03-13T11:10:18","modified_gmt":"2020-03-13T03:10:18","slug":"you-may-need-to-pay-sst-for-digital-service-provided-by-foreign-service-provider","status":"publish","type":"post","link":"https:\/\/www.nbc.com.my\/blog\/you-may-need-to-pay-sst-for-digital-service-provided-by-foreign-service-provider\/","title":{"rendered":"Service Tax on “Digital Service” provided by Foreign Service Provider – Have you paid it?"},"content":{"rendered":"

 <\/p>\n\n\n\n
\u201cdigital services\u201d means any services<\/strong> that is delivered or subscribed over the internet<\/strong> or other electronic networks<\/strong> and which cannot be obtained without the use of information technology<\/strong> and<\/u> where the delivery of the services is essentially automated<\/strong> – Section 2 of Service Tax (Amendment) Act 2019.<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

It will depend on whether the Foreign service provider(s)<\/strong> is a Foreign Registered Person (FRP)<\/strong> with Customs Malaysia<\/u>. FRP is required to issue their invoice(s) indicating the Service Tax portion (prescribed particulars required in accordance with Section 56G of Service Tax (Amendment) Act 2019).<\/p>\n

If the Foreign service provider(s) is not <\/u>FRP<\/u> \/ does not register with Customs Malaysia<\/u>, the service(s) acquired will be treated as Imported Taxable Services<\/a> (i.e. Taxable Service(s) acquired by any person in Malaysia from any person who is outside Malaysia – Section 2 of Service tax Act 2018).<\/em><\/p>\n

 <\/p>\n\n\n\n\n
Imported Taxable Services<\/a><\/strong><\/td>\nService Tax on Digital Services<\/strong><\/td>\n<\/tr>\n
Taxable services<\/strong> (including provision of digital services which come into operation on 01\/01\/2020) under the Service Tax Regulations 2018<\/u><\/p>\n

Foreign service provider(s)\u2019 invoice without<\/u> service tax<\/strong> charged<\/p>\n

acquired by businesses (B2B)<\/strong><\/p>\n

The business who acquired the services need to account for the service tax.<\/p>\n

– Please click this link <\/em>Imported Taxable Services<\/a><\/em> and refer to \u201cManual for online declaration and payment<\/strong>\u201d section<\/em><\/td>\n

Digital services<\/strong> defines under the Service Tax Act 2018<\/u><\/p>\n

FRP<\/strong>\u2019s invoice with<\/u> service tax<\/strong> charged<\/p>\n

acquired by businesses (B2B<\/strong>) or non-businesses (B2C<\/strong>)<\/p>\n

Service tax will be paid to FRP who will account the service tax by using the DST-02 form. <\/strong><\/p>\n

– businesses and non-businesses just pay directly to FRP<\/strong> only<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Remarks:<\/strong>
\nEffective from 01 Jan 2020, the Taxable Services have been expanded.\u00a0E.g. “Taxable Services – Item (h) column (2) of Group G” expanded as below:-<\/p>\n

\u201cinformation technology services including distributing or reselling of information technology services<\/strong> on behalf of any person\u201d;<\/em><\/p>\n

Kindly click : Service Tax Policy 1\/2020 concerning the Expansion of scope of Taxable Services<\/a>.<\/p>\n

Service Tax Exemption \/ Refund (by offsetting method) <\/strong><\/h3>\n\n\n\n\n\n
Custom\u2019s Service Tax policies<\/strong><\/td>\nService tax exemption \/ refund<\/strong><\/td>\n<\/tr>\n
Service Tax Policy No 2\/2020<\/a><\/p>\n

 <\/td>\n

Service tax exemption on Imported Taxable Services<\/a><\/td>\n<\/tr>\n
Service Tax Policy No 3\/2020<\/a><\/p>\n

 <\/p>\n

 <\/td>\n

claiming refund via offsetting method<\/p>\n

on service tax on imported digital service<\/strong> provided by foreign registered person.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Your business may be qualified for service tax exemption\/refund (by offsetting method) if fulfilling the conditions stated in the Service Tax Policies as per links provided above.<\/p>\n

\n

Important!<\/u><\/strong><\/span><\/h2>\n
    \n
  1. Service tax is required to be paid in both circumstance (i.e. Imported Taxable Services<\/a> or digital services) as mentioned above unless<\/u> fulfilling conditions as stated in service tax policies issued by Customs Malaysia.<\/li>\n
  2. The company is required to pay \u201cWithholding Tax (WHT)\u00a0<\/strong>to the Inland Revenue Board (IRB)\u201d\u00a0in addition\u00a0<\/strong>to the aforesaid \u201cService Tax paid to Customs\u201d if the\u00a0services provided fall within the ambit of WHT scope under Income Tax Act 1967.<\/strong><\/li>\n<\/ol>\n

    e.g. 1 : Advertising services rendered by foreign companies such as digital marketing providers from Google, Facebook and etc. are subject to\u00a0service tax<\/strong>\u00a0and also fall within the scope of\u00a0WHT<\/strong>.\u00a0\u00a0\u00a0<\/em><\/p>\n

    Please click\u00a0Malaysian Withholding Tax<\/a>\u00a0for further information.<\/p>\n

    Disclaimer: All information above are presented for reference purposes & you are advised to contact the Customs or IRB for further information\u00a0or your company\u2019s appointed tax agent\u00a0for more details.<\/p>\n

     <\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

      \u201cdigital services\u201d means any services that is delivered or subscribed over the internet or other electronic networks and which cannot be obtained without the use of information technology and where the delivery of the services is essentially automated – Section 2 of Service Tax (Amendment) Act 2019.   It will depend on whether the […]<\/p>\n","protected":false},"author":3,"featured_media":6427,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[177],"tags":[178],"class_list":["post-6422","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sales-services-tax-sst","tag-sales-services-tax-sst"],"_links":{"self":[{"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/posts\/6422"}],"collection":[{"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/comments?post=6422"}],"version-history":[{"count":0,"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/posts\/6422\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/media\/6427"}],"wp:attachment":[{"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/media?parent=6422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/categories?post=6422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nbc.com.my\/blog\/wp-json\/wp\/v2\/tags?post=6422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

    e.g.2:\u00a0 Software downloaded \/ delivered by email from software provider will be classified as \u201cDigital Service (if <\/em>FRP<\/em><\/strong>)\/ Imported Taxable Services<\/a>\u201d<\/em> and subject to \u201cservice tax and also WHT\u201d.<\/em><\/p>\n