• INTRODUCTION

• SERVICES TAX LEGISLATION

• LICENSING

• CHARGE TO TAX

• RATE OF TAX

• WHEN SERVICE TAX IS DUE AND PAYABLE

• DETERMINATION OF CHARGE AND VALUE

• EXPORTED TAXABLE SERVICE

• WHO PAYS THE SERVICE TAX
  

Service Tax is a form of indirect tax, imposed under the provision of the Service Tax Act 1975 on services as prescribed under the Second Schedule of the Sevice Tax Regulations, 1975. It is simply a tax charged and levied on any taxable service provided by any taxable person. Service tax came into effect on 1 March 1975. Since 1992 the scope of service tax has expanded vastly to include professional services.

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Legislation governing the administration and operation of service tax are::-

  i. Service Tax Act, 1975
ii. Service Tax Regulations, 1975
iii. Service Tax (Rate of Tax) Order, 1975

The Service Tax Act, 1975 shall apply throughout Malaysia excluding Langkawi, Labuan, Free Zones (as defined in the Free Zones Act, 1990), and the area known as ‘Joint Development Area’ (JDA).

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There are three categories of licensing under the Service Tax Act 1975:-          

 

Service Tax Licence Application

Application must be made by: Director or secretary for a corporate body. The owner or secretary for a non corporate body. Any person responsible in receiving any notice or other documents. All the shareholders of the shareholders company. JKED No. 1 (RM0.15 cents each) must be filled and submitted in two (2) copies to the Senior Officer of Customs at the one-stop Licensing Centre, Royal Customs & Excise Department which is nearest to the company’s business management office. The following documents are to be attached:- Official letter pertaining to the application. Authorised letter/appointment letter for a person responsible to deal with customs. Form 9 – Registration of business Memorandum & Article of Association (MAA) Form 24 – Return of Allotments of Share Form 44 – Registration of companies Form 49 – Particulars of Directors and Secretaries. Photostated copy of Identity Card/Passport. Photos (2 pcs) of the Applicant/partners. Location plan of the premise Additional Supporting Documents: Certificate of Fitness (CF) Certificate issued by professional bodies. Approval letter from customs for forwarding agent. Bank Guaranttee Approval letter from Bank Negara for charge cards/credits cards Approval letter from District Office Licensing Board - Section 35 Excise Act 1976. Photocopy licence from local authority such as Health Centre Licence Authorised letter from the company if the application made by an agent. Appendix C – information aoubt annual sales turnover (Profit & Loss Account). Some of the professional bodies do not have to register with the Company’s Act 1965 or Register of Business 1956 if they want to start any businesses. The businesses can be started if they have a certificatge issued by the Registered Professional Bodies. JKED No. 1 must be signed by the owner/director/secretary/any person responsible in receiving any notice or other documents on behalf of that business body/all the partners of the business. Applicant designation must be shown clearly either he is a Director, Chairman or others with authority. When all the particulars needed in the JKED No. 1 form has been completed, a service tax licence will be issued to the applicant.

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  CHARGE TO TAX

Service tax is charged and levied on:-

1. Taxable Service – any service which is prescribed to be a taxable service, and means any service referred to in Second Schedule of the Service Tax Regulations 1975 in respect of which service tax is chargeable under the Service Tax Act, 1975.

2. Taxable Person – any person who is prescribed to be a taxable person and means any person referred to in Second Schedule of the Service Tax Regulations, 1975, in respect of which service tax is chargeable under the Service Tax Act, and includes an individual, a firm, an association of persons, a company and every juridical person.

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Service tax has to be charged and levied on the taxable service provided by the taxable person based on the various rates-

1. 5% of the charge of the service as ascertained in accordance with section 4(a) of the Act,

2. RM2.00 per room per night for provision of rooms for lodging or sleeping accommodation, prescribed under item (a) Group A of the Second Schedule to the Service Tax Regulations 1975, to a person responsible for promoting the hotel or the tourist industry of Malaysia, where no charge is levied or collected; or

3. RM50.00 per card per year for the provision and issuance of charge or credit cards.

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The service tax chargeable under the Service Tax Act 1975 shall be due at the time:

1. When payment is received for the taxable service provided to the customer by the taxable person.

2. When the whole or any part of the payment for any taxable service provided is not received within a period of twelve calendar months from the date of issued of the invoice for the taxable service provided, service tax shall be due on the day following that period of twelve months.

3. Any tax which falls due during any taxable period shall be payable to the Director General within twenty-eight days from the expiration of that taxable period.

* Taxable Period

A period of two calender months during which the taxable person provided taxable service, is known as the taxable period. At the end of each taxable period and not later than 28 days thereform, the taxable person shall submit a return (in form C.P. No. 3) and pays the tax to the Customs Department. Nil return has to be submitted if there is no payment for a particular taxable period.

* Penalty :-

A penalty is imposed for the payment not made within the stipulated period of 28 days from the expiration of the taxable period.

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According to section 4 of the Service Tax Act 1975 the charge, premium or value on which service tax is payable (charged and levied) shall be ascertained, in this manner :

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Exported taxable service means service supplied for and to a person in a country other than Malaysia (excluding Langkawi, Labuan dan Free Zones), provided that the service is not supplied in connection with goods or land situated in Malaysia and the person is not in Malaysia at the time the service is performed.

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The taxable person who provides taxable service pays the service tax to the Customs Department. This person, will issued an invoice to the customer of such taxable service, he will state on the invoice, separately, the amount of service tax payable. The person, therefore, recovers the tax payable from the customer.

For further information on service tax, please contact:

Director General of Customs,
Internal Taxes Division,
Service Tax Section,
Level 6B, Block 11,
Government Office Complex,
Jalan Duta,
50596 Kuala Lumpur
MALAYSIA

Tel; (603) 6516088/6502161
Fax : (603) 6513104

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