Introduction:
With effect from 1st January 2019, taxable service acquired by any person in Malaysia from any person who is outside Malaysia for the purpose of business will be subject to 6% imported service tax. This will include taxable services acquired by person not registered under sales and service tax. This article aims to shed light on the key aspects of the imported service tax, including the types of taxable services subject to the tax, the liability for payment, and the necessary reporting procedures.
Types of Taxable Services Subject to Service Tax:
Taxable Imported services shall be the taxable services as prescribed under First Schedule of Service Tax Regulation 2018. Generally, this would include professional services such as legal services, IT services, digital services, engineering services, architectural services, management services etc. Importantly, this service tax applies even to those who are not registered under the sales and service tax.
Liability for Service Tax Payment:
The service tax on imported taxable services is borne by the payer of the fees for such services. If a business is charged service tax on imported digital services by a Foreign Registered Person, there is no requirement to account for service tax on the same imported taxable services. However, it is essential to note that the responsibility for payment remains with the payer.
Service Tax Due Date and Reporting Procedures:
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The service tax on imported taxable services becomes due at the time of payment or upon receipt of the invoice, whichever occurs earlier. Registered persons are required to self-account for the 6% service tax and declare it in the SST-02 return, following the existing taxable period. On the other hand, if a non-taxable person conducting a business acquires any imported taxable service, they must file a service tax declaration and payment through the SST-02A return. This return should be submitted to the Director-General no later than the last day of the month following the end of the month in which the payment or invoice for the imported service was received, whichever comes first.
Conclusion:
The implementation of the 6% imported service tax in Malaysia on taxable services acquired from abroad for business purposes has implications for both registered and non-taxable persons. Understanding the types of services subject to this tax, the liability for payment, and the reporting procedures is crucial to ensure compliance with the regulatory requirements. By adhering to these guidelines, individuals and businesses can fulfill their obligations and contribute to the country’s tax system effectively.
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