PROGRAM SALES AND SERVICE TAX (SST)

TALK FOR TAX 2022

UiTM Tapah
MOHAMED INMRAN BIN SAHUL HAMID
Cawangan Kawalan Kemudahan, Fasilitasi dan Konsultasi
Bahagian CDN, JKDM Perak
10 Disember 2022

The information presented in the slides aim to provide a better under standing of SST treatment and is not intended to address all possible SST
issues. The information is correct as at the date of presentation. While all effort has been made to ensure that this information is consistent with
the prevailing law and procedures, should there be any changes, RMCD reserves the rights to vary our position accordingly.
MALAYSIAN SALES TAX MODEL

• TO REPLACE PREVIOUS TAX SYSTEM

SALES TAX & GOODS AND SERVICES

SERVICE TAX (SST) TAX (GST)
RATE RATE = 0 %
SALES TAX: 10%, 5% & SPECIFIC RATE THRESHOLD = RM 500,000
SERVICE TAX: 6% & SPECIFIC RATE
THRESHOLD:
SALES TAX: RM500K
SERVICE TAX: NIL, RM 500K, RM 1.5M
 AGENDA

Sales Tax Overview

Service Tax Overview

OVERVIEW SALES TAX 2018
SALIENT FEATURES OF ST & GST
Sales Tax 1.0 GST Sales Tax 2.0
Introduced in 1972 Introduced in 2015 1 September 2018
A single stage A multi stage A single stage
consumption tax consumption tax consumption tax
Imposed on selected Imposed on all goods Imposed on selected
goods at and services unless goods at manufacturing
manufacturing level specifically exempted level and on importation
and on importation and on importation
Rate Rate Rate
• general rate = 10% • single rate = 6% • general rate = 10%
• reduced rate = 5% • reduced rate = 5%
• specific rate on • specific rate on
petroleum products petroleum products
Threshold = Threshold = RM500,000 Threshold = RM500,000
RM100,000
Sales Tax Legislation
Act
•Sales Tax Act 2018

Regulations
•Sales Tax Regulations 2018
•Sales Tax (Customs Ruling) Regulations 2018
•Sales Tax (Determination of Sales Value of Taxable Goods) Regulations 2018
•Sales Tax (Compounding of Offences) Regulations 2018

Order
•Sales Tax (Total Value Of Taxable Goods) Order 2018
•Sales Tax (Rates Of Tax) 2022
•Sales Tax (Goods Exempted From Sales Tax) Order 2022
•Sales Tax (Person Exempted From Payment of 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 & Charge

Sales tax :-

•is charged and levied on all taxable goods either sold,

used or disposed by a registered manufacturer who
manufactured that goods in Malaysia

•is levied on all taxable goods imported by any person

How Sales Tax Works?

Manufacturer Wholesaler Retailer Consumer

Element of sales
Govt. collects sales tax
at the manufacturer’s
tax embedded in
level only the price paid
by consumer
How Sales Tax Works?

Manufacturer Wholesaler Retailer Consumer

Element of sales
IMPORTED GOODS tax embedded in
the price paid
by consumer
Meaning Of Manufacture
For goods other than petroleum
 The conversion by manual or mechanical means of organic
or inorganic materials into a new product by changing the
size, shape, composition, nature or quality of such materials
 Includes painting, galvanising & chroming
 Includes the assembly of parts into a piece of machinery or
other products,
Ø Excludes the installation of machinery or equipment for the
purpose of construction

For petroleum
•any process of separation, purification, refining,
conversion and blending
Meaning Of Taxable Person

• “taxable person” means a registered

manufacturer or a manufacturer
who is liable to be registered under
section 12;
• “registered manufacturer” means
a manufacturer registered under
section 13 or 14;

• “manufacturer” means a
person who engages in the
manufacture of goods;
 Manufacture

1. The conversion of materials into a new product

by changing the size, shape, composition, nature or
quality of such materials.
 Manufacture

2. It includes the assembly of parts into a piece of

machinery or other products.

parts of machine
into a piece parts into other
product
 Manufacture

3. But it does not include the installation of

machinery or equipment for the purpose of
construction.
 Manufacture

4. The process of refining petroleum including

separation, conversion, purification and blending of
refinery streams or petrochemical streams.
 Is this manufacturing? Logs
HS 4403

Live
Trees HS
Is this manufacturing?
0602

Sawn Is this
Timber HS manufacturing?
4407
Furnitur
e HS
 Liability To Be Registered
• any manufacturer of taxable goods is liable to be
registered if the total sale value of taxable goods exceeds
the sale value (threshold) determine by minister in

q Sales Tax (Amount of Sale Value of Taxable

Goods Manufactured) Order 2018

value:

v taxable goods means goods of a class or kind

not exempted from sales tax; [i.e. goods which
are not listed in Sales Tax (Goods Exempted
From Sales Tax) Order 2018]
Sales Tax Registration
Determination of annual sales turnover
Includes:
Ø Local sales of manufactured taxable goods
Ø Charges for work performed in manufacturing taxable goods (sub-
contract work)
Ø Manufactured taxable goods and exported (including transportation to
DA & SA)
Excludes:
Ø Sales of manufactured goods exempted from sales tax
Ø Trading of raw materials, component or packaging materials
Ø disposal other than by way of sale of finished goods
7

SALES TAX (GOODS EXEMPTED FROM TAX) ORDER 2022

Listed = NOT Taxable NOT listed = TAXABLE

Tariff code Goods exempted

7

SALES TAX (GOODS EXEMPTED FROM TAX) ORDER 2022

https://mysst.customs.gov.my/SSTOrders
7

SALES TAX (GOODS EXEMPTED FROM TAX) ORDER 2022

Live animals Machinery Health
• Horses • Vending machine • Medicine
• Fish • Escalator • Hearing aids
• Sheep & goats • Industrial machine • Pacemaker
• Paracetamol
Food items Personal items
• Rice • Deodorant Vehicle
• Beef, mutton and • Sanitary towels • Motorcycle below
chicken • Baby diapers 250cc
• Seafood • Bicycle
• Fruits & Vegetables General goods
• Sardine
• Cooking oil • Newspaper
• Coffee • Books
• Bread • Wheelchair
 RATE OF TAX
SALES TAX (RATES OF TAX) ORDER 2022

5% 10% RM0.00/lit

5% - reduced sales tax rate 10% - default sales tax rate Specific rate – for petroleum
products
First Schedule in the Order
Second Schedule in the Order
7

SALES TAX (RATES OF TAX) ORDER 2022

https://mysst.customs.gov.my/SSTOrders
5

RATE OF TAX
• How to determine the rate of sales tax for goods?
q Goods

Ø Is the good listed in Sales Tax yes

(Goods Exempted From Tax)
Order 2022?
ØIs the good listed in
the First schedule?
ØIs the good listed in the
schedule in Sales Tax (Rate of
Tax) Order 2022? n yes
yes
n
o o

Specific
rate
 MEANING OF TAXABLE GOODS
vtaxable goods means goods of a class or kind not exempted from sales tax; [goods which are not listed in
vSales Tax (Goods Exempted From Tax) Order 2022)]

PROCESSED FOODS FURNITURE MOTOR

VEHICLES
• Processed fruits • Passenger motorcars
• Fruit juice • Sofa • Motorcycles > 250cc
• Butter, jams and cheese • Mattress
• Cod liver oil

OTHER
PERSONAL ITEMS WATCHES/CAMERAS/SPECTACLES
• Engine oil for cars and motorcycle
• Brake fluid
• Sanitary equipment eg toilet bowl and sinks
• Shampoo
• Tobacco products • Toothpaste
• Alcoholic beverages • Shower gel
• Construction material eg. Tiles, ceramic wares,
window and door frames
FOOD & DRINKS ELECTRICAL APPLIANCES

• Washing machine
• Fizzy drinks (Pepsi, 100+) • Television
• Chocolate • Radio
• Ice cream • Electronic devices
• Smartphones
• Computer devices
• Printer
SALES TAX VALUATION
The sale value of locally manufactured taxable goods is
determined in accordance with regulations made under Sale
Tax Act 2018.

Sales value of taxable good imported into Malaysia represent

the sum of the followings:

 The customs value;

 The amount of customs duty paid or to be paid;
 The amount of excise duty paid or to be paid.
SALES TAX (RULES OF VALUATION)
REGULATIONS 2018
• The sale value of the goods shall be determined on the basis
of the transaction value of the goods as the primary basis of
valuation

• Transaction value of the goods

Ø The actual price the goods are sold, without any
conditions or restrictions imposed to purchaser
Ø Purchaser is not required to give parts of proceed on
subsequent sale to the manufacturer
Ø Purchaser and manufacturer is not related or if related
the relationship did not influence the price
VALUE OF TAXABLE GOODS

Value of taxable imported goods

The value of goods imported into Malaysia shall be the sum of
the following amounts:
à the value of the goods for the purpose of customs duty
determined in accordance with the Customs Act 1967
à the amount of customs duty, if any, paid or is to be paid on
the goods
à the amount of excise duty, if any, paid or is to be paid on
the goods.
VALUE OF TAXABLE GOODS
Value of taxable imported goods
 Liability To Be Registered

v Manufacturer of goods v Manufacturer of taxable

exempted from sales tax goods is liable to be
is NOT allowed to be registered if total turnover for
registered manufacturer 12 months exceeds
under Sales Tax Act. RM500,000.
v Manufacturer having turnover
less then RM500,000 may
register voluntarily.
Registration

Manufacturer becomes liable to register for

sales tax if
• manufacture taxable goods;
AND
• total sales of taxable goods has exceeded
the threshold
 Sales Tax Registration
Mandatory Registration
Liability to Register
• Any person who manufactures taxable goods in
Malaysia
• Any person who is a sub-contractor in manufacturing
of taxable goods in Malaysia
• Registration is mandatory for manufacturer whose
taxable turnover has exceeded the prescribed
threshold of RM500,000
• Calculation of taxable turnover for registration is
based on total value of manufactured taxable goods
sold or expected to be sold for 12 months period
Are foreign manufacturer required to register for
sales tax in Malaysia?

Foreign manufacturer that do not have a permanent

establishment in Malaysia are not liable to register for
sales tax.

Voluntary registration is also not available for foreign

manufacturer.
 DATE OF REGISTRATION

LIABLE APPLICATION

DATE OF LIABILITY
THE FINAL DATE
 Voluntary Registration

1. A manufacturer of taxable goods that the

annual turnover is the same/less than threshold value.

2. A manufacturer carrying out the manufacturing

operations in Schedule A, Sales Tax (Exemption From
Registration) Order 2018.
 Late Registration

A registration made by the DG when a manufacturer

after being liable to be registered fails to make an
application for the registration.
 Cessation Of Liability To Be Registered

1. A registered manufacturer ceases to be liable to be

registered if the total annual sale value of taxable goods
does not exceed the threshold.

2. A registered manufacturer does not cease to be liable

to be registered if he ceases manufacturing temporarily or
suspends manufacturing taxable goods for a period of 30
days or more.
38
39
Exemption from Registration

§ Sales Tax (Exemption From Registration) Order 2018

Ø manufacturing operation specified in schedule A
are exempted from registration irrespective of the
total value of sales of taxable goods
Ø the person solely carry on such manufacturing
operations and does not carry on any other
manufacturing activity
Ø 20 categories of manufacturing operations
v may apply for voluntary registration and if approved
has to comply with the requirement of Sales Tax Act
Exemption from Registration
Sales Tax (Exemption From Registration) Order 2018

Ø Example of manufacturing operation exempted from

registration
ü The production of copies of document by the photo
copy or similar copying process. 
ü The repacking of bulk goods into smaller packages by
a person other than a registered manufacturer. 
ü The repair of second hand or used goods.
ü The colouring of cloth supplied by another person
without changing the size or shape of the said cloth.
ü The manufacture of batik fabrics using traditional
techniques.
ü The installation of air conditioners in motor vehicles.
Single Taxable Person

§ Two or more business entities directed by DG to be

registered as a single taxable person

§ Artificial separation of business for the purpose of tax

avoidance
§ Determination of artificially separation of business
ü financial link
ü economic link, and
ü organizational link
Responsibility Of Registered Manufacturer
• The tax is charged on the sales &
disposal of taxable goods
• Tax becomes due and payable at the
time of goods sold or disposed

Tax
Sales due

Registered manufacturer shall

account for tax using SST-02 return
Taxable period every 2 months

Registered manufacturer shall - Registered manufacturer shall account for

pay the tax due and payable no later tax in return for the taxable period
than the last day of the following
months after taxable period - The return shall be submitted no later than the
last day of the following month after the end of
the taxable period
RECORD KEEPING

§ Bahasa Malaysia or English

§ 7 years
§ can be kept in soft or hard copy
§ to be kept in Malaysia
TAXABLE PERIOD

Ø Regular interval period where a taxable person

accounts and remits sales tax to the
Government.

Ø The default taxable period for the registered

manufacturer to be bimonthly (2 months)
period.

v Registered manufacturer may apply :

§ for taxable period other than the default
taxable period
TAXABLE PERIOD
Odd Financial Year End (FYE) Month (the effective
date of registration is 1st September 2018)
Month of First Taxable Return and Subsequent
Financial Period Payment Taxable Period
Year End Period Due (Every Two
Months)
January 1st to 30th 1st to 31st 1st October to
March September October 2018. 30th November
2018 2018, 1st
May
December 2018
July to 31st January
September 2019, 1st
November February to 31st
March 2019 and
so on.
TAXABLE PERIOD
Even Financial Year End (FYE) Month (the effective
date of registration is 1st September 2018)
Month of First Taxable Return and Subsequent
Financial Period Payment Taxable Period
Year End Period Due (Every Two
Months)

February 1st 1st to 30th 1st November to

September November 31st December
April
2018 to 31 2018. 2018, 1st January
June October to 28th February
August 2018 2019, 1st March to
30th April 2019
October and so on.
Disember
PAYMENT OF TAX

v Payment for tax due & payable declared in SST-02

Payment of tax by registered manufacturer may be

made
• by post to Customs Processing Centre (CPC)
ü cheque, bank draft,
• by electronic means
ü Internet banking, FPX (financial processing
exchange)
PAYMENT OF TAX
v Imposition of penalty with regards to payment of tax by
registered manufacturer

Payment made Penalty Total Penalty

On time or before due date No penalty -

1 to 30 days after due date 10% 10%

Additional 1 to 30 days +15% 25%

Additional 1 to 30 days +15% 40%

More than 90 days after due

Prosecution 40%
date
 SALES TAX
EXEMPTION
Power Of Minister To Exempt

Section 35(1)(b) STA 2018

§ The Minister may, by order and subject to

conditions as he deems fit, exempt any
person or class of person from payment
of the whole or any part of the sales tax
which may be charged and levied on any
taxable goods manufactured or imported
Power Of Minister To Exempt

Section 35(1)(b) STA 2018

Schedule A – any person or specific person

Schedule B – Manufacturer of exempted goods

Schedule C – Manufacturer of taxable goods

 Power Of Minister To Exempt
Section 35(3) STA 2018

 The Minister may, in any particular case and subject to

conditions as he deems fit :-

§ Exempt any person or class of person from payment of the whole or

any part of the sales tax which may be charged and levied on any
taxable goods manufactured or imported

§ Exempt any registered manufacturer from charging and

collecting sales tax on taxable goods

§ Direct the DG to make refund to any person of the whole or any

part of sales tax or penalty paid by such persons
Time when exemption operates
Where the exemption is subject to the
production of a certificate:
Imported goods – at the time the certificate is
produced to the proper officer of sales tax

Locally manufactured goods – at the time the

certificate is produced to the registered
manufacturer
SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF SALES TAX) ORDER 2018

In SST 1.0,
Schedule A Schedule B Schedule C we called it
System Ring
• YDPA & Ruler/ • Manufacturer • Registered
Ruling Chiefs of of specific manufacturer
any State non-taxable • Persons who
• Federal or State goods import or purchase
Gov. Dept. • Manufacturer on behalf of a
• Airline Co. of non-taxable registered
goods for manufacturer
• Oil & Gas Co. export • taxable goods which
• Aerospace MRO are subsequently
Co. returned by a
• Sub contractor subcontractor

72 Items 4 Items 5 Items

 SALES
SALES TAX
TAX (PERSONS
(PERSONS EXEMPTED
EXEMPTED FROM PAYMENT
FROM PAYMENT OF ORDER
OF SALES TAX) SALES2018
TAX) ORDER 2018

Schedule A Exemption
• These are exemptions for specific persons or industries.

• Examples include goods imported temporarily, ships spares, small value

relief for personal items and duty free items.

• It can also include goods imported or locally manufactured for use in the
petroleum upstream industry and trade facilitation measures, such as the
purchase of goods for export.

• Some industries specifically approved by the Malaysian Investment

Development Authority (MIDA) may also obtain exemption on fixed
assets for use in approved activities.
 SALES
SALES TAX
TAX (PERSONS
(PERSONS EXEMPTED
EXEMPTED FROM PAYMENT
FROM PAYMENT OF ORDER
OF SALES TAX) SALES2018
TAX) ORDER 2018
SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF SALES TAX) ORDER 2018

Schedule B Exemption

• These exemptions are given to manufacturers of specific goods

such as price controlled goods, pharmaceutical products milk
products and exempt goods for export.

• Manufacturers of such goods would not need to be registered for

sales tax to avail of the exemption.
 SALES
SALES TAX
TAX (PERSONS
(PERSONS EXEMPTED
EXEMPTED FROM PAYMENT
FROM PAYMENT OF ORDER
OF SALES TAX) SALES2018
TAX) ORDER 2018
SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF SALES TAX) ORDER 2018

Schedule C Exemption

• Sales tax exemption is given to a registered manufacturer for the purchase of raw
materials, components and packaging / packing materials to be used in the
manufacturing of finished taxable goods.

• This facility is made available to registered manufacturer to avoid double taxation

on manufactured taxable goods

• The exemption also allows registered manufacturer to send unfinished goods /

semi-finished goods to other registered manufacturer (subcontractor) to carry out
further manufacturing / to complete its manufacture and subsequently acquire
back the semi-finished taxable goods / finished taxable goods without sales tax.
SALES TAX (PERSONS EXEMPTED FROM PAYMENT OF SALES TAX) ORDER 2018

APPLICATION FOR SALES TAX EXEMPTIONS

Application for exemptions under Schedule A, B

and C of Sales Tax (Person Exempted From
Payment of Tax) Order 2018

Ømade online through MySST System.

60
DESIGNATED
AREA
 DESIGNATED AREA “Labuan” means the
Island of Labuan and its
dependent islands, namely,
Areas in Designated Area Rusukan Besar, Rusukan
Kecil, Keraman, Burong,
Papan and Daat
“Langkawi” means the
Island of Langkawi and
all adjacent islands lying
nearer to the Island of “Pangkor” means
Langkawi than to the the Pangkor Island,
mainland Mentagor Island,
Giam Island, Tukun
Terindak Island,
Pelanduk Island,
Anak Pelanduk
“Tioman” means the
Island, Landak Island,
Island of Tioman and
Batu Orang Tua and
the islands of
Batu Jambal.
Soyak,Rengis,Tumok,
Tulai, Chebeh, Labas,
Sepoi and Jahat.
 SALES TAX TREATMENT IN DESIGNATED AREA

• Sale Tax Act is not applicable to any taxable goods manufactured

in DA except petroleum
• No sales tax levied and payable on taxable goods
ü Imported into DA
ü Transported into DA from Malaysia
ü Transported between DA
ü Transported from DA to special areas
• unless the Minister otherwise directs in an order
 DESIGNATED AREA
Sales Tax Treatment
Goods Subject to Sales Tax on Importation or Transportation from Malaysia
Sale Tax (Imposition of Tax in Respect of Designated Area) Order 2018

• Anchovies
• Petroleum
• Marbles
products
Langkawi • Petroleum Labuan
products

• Motor vehicles
Tioman Pangkor • Petroleum products
 ST Treatment in Special Area (SA)

Special Area
“free zone” has the meaning assigned to it
under subsection 2(1) of the Free Zones Act
1990 [Act 438].

“licensed warehouse” means any warehouse

or place licensed under section 65 of the
Customs Act 1967 [Act 235];

“licensed manufacturing warehouse” means a licensed

warehouse in respect of which an additional licence to
carry on any manufacturing process has been granted
under section 65a of the Customs Act 1967;

“Joint Development Area” has the meaning

assigned to it under section 2 of the Malaysia-
Thailand Joint Authority Act 1990 [Act 440];
65
DESIGNATED AREA
Sales Tax Treatment
• Sale tax is levied and payable on all
taxable goods transported to Malaysia
from DA

Malaysia
Sales tax Designated Area
levied and
payable
 SALES TAX TREATMENT IN SPECIAL AREA
• Sales Tax Act is not applicable to any taxable goods manufactured in
special area (SA)
• No sales tax levied and payable on taxable goods
ü Imported into SA
ü Transported into SA from Malaysia
ü Transported between SA
ü Transported from SA to DA
• unless the Minister otherwise directs in an order
• Sales Tax is levied and payable on all taxable goods transported
to Malaysia from SA
• Deemed importation into Malaysia
• Customs declaration and sales tax collection in SA
OVERVIEW SERVICE TAX 2018
SALIENT FEATURES OF SERVICE TAX & GST
Service Tax 1.0 GST Service Tax 2.0
Introduced in 1975 Introduced in 2015 1 September 2018
A single stage consumption A multi stage consumption A single stage consumption
tax tax tax
Imposed on Prescribed Imposed on all goods and Imposed on Prescribed
Services services unless specifically Services and on imported
exempted and on importation taxable services

Rate Rate Rate

• general rate = 6 % • single rate = 6% • general rate = 6 %
• specific rate on • specific rate on
Credit/Charge Card Credit/Charge Card
(RM50/card) (RM25/card)
Threshold = Threshold = RM500,000 Threshold =
RM 0 –RM 3M RM 0 –RM 1.5 M
 MALAYSIAN SERVICE TAX
§ NIL
Threshold § RM 1.5 M
§ RM 500,OOO

§ Monthly – Imported Taxable Services

Taxable Period § Bi – Monthly – Local Service Tax by Registered Person
§ Quarterly – Service Tax - Foreign Registered Person (FRP)

§ SST 02A
Return § SST 02
§ DST 02

§ 6%
Rate § RM25/card

§ 1.9.2018 - Local Service Tax

Implementation § 1.1.2019 – Imported Taxable Service
Date § 1.1.2020 – Service Tax on Digital Service by FRP
 Overview of Service Tax
§ Implementation date – 1st September 2018
§ Self-assessment system
§ Scope of tax
§ Provision of service in Malaysia
§ Provision or sale of goods by selected business group
§ Rate of tax
§ 6%
§ Specific: RM25 per year for credit / charge card
§ Single stage tax
§ Registered business under Service Tax Act (STA) is tax collecting agent
§ Tax on consumption

71
 Service Tax Legislation
Act
- Service Tax Act 2018

Regulations
- Service Tax Regulations 2018
- Service Tax (Customs Ruling) Regulations 2018
- Service Tax (Compounding of Offences) Regulations 2018

Order
- Service Tax (Appointment of Date of Coming Into Operation) Order 2018
- Service Tax (Appointment of Effective Date For Charging and Levying Of
Service Tax) Order 2018
- Service Tax (Imposition of Tax In Respect Of Designated Areas and Special
Areas) Order 2018
- Service Tax (Rate Of Tax) Order 2018
- Service Tax (Persons Exempted From Payment of Tax) Order 2018

72
 Scope & Charge
Service tax is charged on:-
• taxable services; Section 7, STA 2018
• provided in Malaysia;
• by a registered person carrying on his business
• Imported Taxable Services by business

Service tax is not chargeable on:-

• imported non taxable services
• certain exported services

Service Tax Due:-

• when payment is received Section 11, STA 2018

73
How Service Tax Works?
Government collects tax ONCE
(at the start)

Businesses

Tax rate
= 6%

Service
provider

Consumer

Government collects tax ONCE

(at the start)
74
à the value in which ST is payable:
à Value of taxable service for
Ø the sale of goods
S.9, STA 2018
Ø the provision of free goods
Ø the provision of services
Ø betting and gaming
Value of taxable service for the sale of goods to
Ø Unconnected person
• the actual price the goods are sold S.9, STA 2018

Ø Connected person
• the price of goods have been sold in ordinary
course of business to unconnected person

Value of taxable service for the provision of free goods

Ø the price of goods have been sold in ordinary course of
business to unconnected person
Value for the provision of taxable service
Ø To unconnected person
• the actual value of taxable service provided
Ø In the case of insurance premium or takaful contribution
• the actual premium or contribution paid
Ø To connected person
• the actual value of taxable service provided in ordinary
course of business to unconnected person
Ø provision of free service
• the actual value of taxable service provided in ordinary
course of business to unconnected person
 Registration

Become liable to register if: Section 12, STA 2018

• make taxable services of prescribed goods and

services
AND
• business taxable turnover has exceeded the
prescribed threshold

78
 Registration

Mandatory Registration Section 13, STA 2018

• Apply – not later than the last day of the month

following the month he reach threshold
• Effective Date of registration: first day of the
month following the month application is made
• Service tax to be charged beginning effective
date given.

79
 Registration

Voluntary Registration Section 14, STA 2018

• Provide taxable services < threshold value;

• Service tax to be charged beginning on
effective date given.

80
 Registration in transitional period

Automatic Registration Section 92 (4), STA

on 1st September 2018 2018

• GST registered person;

• Provide taxable services ≥ threshold value on the
effective date;
• Date of registration: 1 September 2018
• Service tax to be charged beginning 1st September
2018.

81
 Scope of Taxable Services
Group Category Note
A Accommodation
B Food & Beverage
C Night-clubs, Dance Halls, Cabarets, Health
and Wellness Centres, Massage Parlours,
Public Houses And Beer Houses
D Private Club
E Golf Club And Golf Driving Range
F Betting And Gaming
G Professionals 12 categories of person

H Credit Card And Charge Card

I Other Service Providers 12 categories of person

82
 THRESHOLD: SERVICE TAX

TAXABLE PERSON THRESHOLD

Hotel (All services including sale of food, RM500,000

drinks and tobacco products)

Restaurant Outside Hotel (All services including catering, takeaways,

food truck & food court operator) RM 1.5 million

Night Club RM500,000

Private Club RM500,000
Golf Club and Driving Range RM500,000
Customs Agent 0
 THRESHOLD: SERVICE TAX

TAXABLE PERSON THRESHOLD

General Insurance or Takaful B2B & General Insurance or Takaful B2C
Excluding Medical Insurance or Takaful
Telecommunication
Paid-TV RM500,000
Advocates and Solicitors
Public Accountant
Surveyors Including Registered Valuers, Appraisers or Estate Agents

Professional Engineer
Architect
 THRESHOLD: SERVICE TAX

TAXABLE PERSON THRESHOLD

Consultancy
Employment Agency
Private Agency
Management Services
Parking Operator
RM500,000
Motor Vehicles Service or Repair
Courier Service Operator
Hire and drive car
Advertising
Credit card or charge card services
RM0
@ RM 25 per card
SERVICE TAX ON IMPORTED TAXABLE SERVICE
TOPIC DESCRIPTION LEGAL REF:
Scope • All taxable services imported into Malaysia (B2B) • S.7 STA2018
• including service within groups of companies • p.3A First Sch. STR2018
(exemption by minister power s.34(3)STA2108)
Who has to pay • Taxable person (TP) • S.7 & S.26
• Person other than Taxable Person (POTTP) • S.7 & S.26A
Value of imported • Actual value of services / Actual insurance premium or • R.4A STR2018
service Takaful contribution
Calculation of tax • value X 6% • S.10

Tax due • When payment is made or invoice is received for the service, • S.11(1)(b)
whichever is the earlier
Manner of making • TP: • S.26(1) / S.26(2)
payment • Return SST-02
• According to taxable period
• POTTP: • S.26A(1)
• Declaration SST-02A
• Not later than last day of the following month

Offences by non • Penalty to be imposed if late in making payment • S.26(8) / 26A(4)

registered person • Assessment of tax for failure to submit declaration • S.27(1)
• Failure to keep records • S.24(6)
IMPORTED TAXABLE SERVICE
Scope: taxable service acquired

•TP
Businesses •POTTP

Service
provider

Consumer

Outside Malaysia (including DA &

Malaysia SA)
IMPORTED TAXABLE SERVICE

Scope: Remote service

- Service consumed in Malaysia

- Eg. - Subscription of data
IMPORTED TAXABLE SERVICE
Scope: Remote service

- Service relates to goods, land or

matters in Malaysia
- Eg. - Architect designed commercial
building plan to be build in Malaysia
 IMPORTED TAXABLE SERVICE

Scope: on site service

e.g.
- Engineering works by overseas
engineer in Malaysia
- Overseas event manager provide
service to event organizer in Malaysia
IMPORTED TAXABLE SERVICE
Scope: taxable service acquired

• All taxable services listed in column (2) of group A to I, First Schedule,

STR2018
• Exemption given to TP or POTTP importing taxable service within group
of companies for taxable services in group G excluding item (j) & (k)
• Exemption conditions - items 3 to 8 of First Sch. STR2018 are
applicable

Ø Where a foreign company provides any services under group

G to another person outside the group of companies, the
service acquired by any company in Malaysia within the
group of companies shall be subject to tax.
IMPORTED TAXABLE SERVICE

Out of scope service

• Service acquired and consumed by person outside Malaysia

ü Eg. Accommodation service outside Malaysia paid by business
entity in Malaysia
• Service acquired by person in Malaysia in relation to goods, land or
matters outside Malaysia
ü Eg. Consultation service in relation to property located outside
Malaysia to prospective Malaysia customer
• Service acquired by person outside Malaysia in relation to goods, land
or matters in Malaysia
ü Eg. Consultation service in relation to business investment in
Malaysia by prospective foreign investor
• Service acquired by person not carrying on business in Malaysia
ü Eg. Online software training acquired by user in Malaysia
IMPORTED TAXABLE SERVICE
Tax due, w.i.t.e.
Ø When payment is made
ü Date of payment
Ø When invoice is received
ü Date invoice received for the purpose of payment

Date of Invoice
received by
Verified by
technical unit
technical unit Tax due
Mac April Mei June

Received by
account
department for
payment
IMPORTED TAXABLE SERVICE

Value of service
• Invoiced value (tax exclusive)

Calculation of service tax

§ Invoiced value received by customer : RM5,000.00
§ Amount to be paid by customer to service provider: RM4,500.00
§ Amount retained by customer for WHT (10%): RM500.00
§ Service Tax due by customer:
ü RM5,000.00 X 6% = RM300.00

95
 Taxable Period

Section 25, STA 2018

The first taxable period:
• Begin from the date he should have been registered under
section 13;
• End on the last day of the of the following month;
• The subsequent taxable period shall be a period of two
months ending on the last day of any month of any
calendar year

• A taxable person may apply in writing to the Director

General for a taxable period other than the period as
determined above

96
 Furnishing Return and Payment

Regulation 14, STR 2018

Every taxable person shall, in respect of his taxable period,

account for the service tax due as required under Section 26
of STA in Form SST-02.

97
Furnishing Return and Payment

98
Furnishing Return and Payment

99
 PAYMENT OF TAX

v Imposition of penalty with regards to payment

of tax by registered person

Payment made Penalty Total Penalty

On time or before due date No penalty -
1 to 30 days after due date 10% 10%
Additional 1 to 30 days +15% 25%
Additional 1 to 30 days +15% 40%
More than 90 days after
Prosecution 40%
due date
 Invoices

Section 21, STA 2018

Registered person who provides taxable service

shall issue an invoice containing prescribed
particulars

101
 Invoices

Prescribed Particulars Regulation 10, STR 2018

i. the invoice serial number;

ii. the date of the invoice;
iii. the name, address and identification number of the registered person;
iv. a description sufficient to identify the taxable services provided;
v. any discount offered;
vi. the total amount payable excluding service tax, the rate of tax and the total
tax chargeable shown as a separate amount;
vii. the total amount payable inclusive of total service tax chargeable; and
viii. 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 taxable service is provided.
102
 Invoices

Section 21, STA 2018

Invoice issued to the customer

in National language or English language

103
 Invoices
Section 22, STA 2018

Production of invoices by computer

A registered person shall be treated as having issued an invoice

to a customer if the prescribed particulars are recorded in a
computer and—

i. are transmitted or made available to the customer by

electronic means; or

ii. are produced on any material other than paper and are
delivered to the customer.
104
 ST Treatment in Designated Area (DA)

Designated Area

“Labuan” means the Island of

“Langkawi” means the Island of
Labuan and its dependent
Langkawi and all adjacent
islands, namely, Rusukan Besar,
islands lying nearer to the Island
Rusukan Kecil, Keraman, Burong,
of Langkawi than to the mainland
Papan and Daat

“Tioman” means the Island of Tioman

and the islands of Soyak,Rengis,Tumok,
Tulai, Chebeh, Labas, Sepoi and Jahat;

105
 ST Treatment in Designated Area (DA)

• no tax shall be charged on any taxable services provided

• within or between the designated areas
• between the designated areas and special areas
• unless the Minister otherwise directs in an order under section
51.
Section 48, STA 2018

No tax chargeable 106

 ST Treatment in Designated Area (DA)

• Service provider whose principal place of business in DA

ü Service within Malaysia is subject to ST

Section 49, STA 2018

107
 ST Treatment in Designated Area (DA)

• Service provider whose principal place of business in Malaysia

ü Service to DA is subject to ST

Section 50, STA 2018

108
 ST Treatment in Special Area (SA)

Special Area
“free zone” has the meaning assigned to it
under subsection 2(1) of the Free Zones Act
1990 [Act 438].

“licensed warehouse” means any warehouse

or place licensed under section 65 of the
Customs Act 1967 [Act 235];

“licensed manufacturing warehouse” means a licensed

warehouse in respect of which an additional licence to
carry on any manufacturing process has been granted
under section 65a of the Customs Act 1967;

“Joint Development Area” has the meaning

assigned to it under section 2 of the Malaysia-
Thailand Joint Authority Act 1990 [Act 440];
109
 ST Treatment in Special Area (SA)

• no tax shall be charged on any taxable services provided

• within or between the special areas
• between the special areas and designated areas
• unless the Minister otherwise directs in an order under section
56.
Section 53, STA 2018

• Service provider whose principal place of business in SA

ü Service within Malaysia is subject to ST
Section 54, STA 2018

• Service provider whose principal place of business in Malaysia

ü Service to SA is subject to ST
Section 55, STA 2018

110
ST Treatment in SA / DA

111