KUALA LUMPUR (Dec 30): The government is implementing several measures to ensure service providers and consumers do not face double taxation following the introduction of a 6% service tax from Jan 1, 2020.
The digital tax is imposed to ensure fair treatment to local service providers by creating a level playing field for local and foreign providers of taxable services to businesses and consumers in Malaysia, the Finance Ministry (MoF) said.
“At the same time, the government is conscious of the issue of rising prices and the cascading effect of double taxation on consumers. In this regard, the government has prepared several (tax) treatments to ensure there is no issue of service providers and local consumers facing double taxation,” it said in a statement.
Among others, group relief facilities are being extended to the importation of eligible services by local service providers from foreign service providers (FSPs) which belong to the same group of companies. In this case, the local service providers will not be taxed on the services imported.
Another measure is to exempt a company from accounting and paying for service tax based on the self-recipient accounting method on importation of professional and advertising services when the imported services are the same as the services provided by the company.
As for local service providers who have paid service tax to FSPs on digital services (business-to-consumer), the MoF said they can claim for refunds from the Royal Malaysian Customs Department and offset the amount based on the actual service tax paid.
Distance-learning services provided online by either local or overseas service providers for the preschool, primary and secondary education level and tertiary education, including vocational and professional training, are not categorised as taxable and thus are not subject to service tax.
Similarly, online services such as e-newspaper and reading materials including educational, technical, scientific, historical or cultural journals or periodicals are not categorised as taxable and are not subject to service tax.
“It must be stressed that the digital tax is only imposed on services and not goods in order to create a fair competitive environment vis-a-vis the FSPs.
“The Customs Department will do a roadshow/ information sessions on the imposition of imported digital services to the public and local industries. In addition, further information can be obtained at the mysst.customs.gov.my portal,” MoF said. – Bernama