Goods and Service Tax

Chapter 10

Indirect and Miscellaneous Taxes and Surcharges

Introduction

Indirect taxes and miscellaneous tax and surcharges include:" " " " " " " " " " " Service Tax; Sales Tax; Import Duties; Licensed Manufacturing Warehouse; Free Zones; Export Duties; Excise Duties; Stamp Duty; Tax or Duty on Gambling Activities; Quit Rent and Assessment; Anti-Dumping Duties.

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Indirect Taxes

Service Tax

Scope of Tax

Service tax is applicable throughout Malaysia, excluding Langkawi, Labuan, Free Zones and the Joint Development Area.

Basis of Taxation

The principal legislation governing service tax is the Service Tax Act, 1975. The Act provides that service tax shall be charged on and paid by any taxable person who carries on a business of providing taxable services. A 5% service tax is chargeable on the value of taxable services provided by a taxable person, except for exported taxable services (which are exempt from tax). Exported taxable service has been defined as “service supplied for and to a person in a country other than Malaysia (excluding Langkawi, Labuan and free other than insurance services 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.”

Taxable Persons and Taxable Services

A complete list of taxable persons and the threshold for taxable services is prescribed in the Second Schedule of the Service Tax Regulations, 1975, a summary of which is as follows:

Taxable Person

Annual Sales Turnover Threshold RM *

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Operators of hotels with more than 25 rooms (subject to some exclusions) Operators of restaurants, bars, snack-bars, coffee houses or places located in hotels with more than 25 rooms Operators of restaurants, bars, snack-bars, coffee houses or places located in hotels with 25 rooms or less Operators of restaurants, bars, snack bars, coffee houses or places located outside hotels (subject to some...