1. Increase in Service Tax Rate from 6% to 8%

Effective March 1, 2024, the rate of tax under Service Tax Act 2018 will increase from 6% to 8% on ALL taxable services excluding food and beverages services ie restaurants or F&B outlets, telecommunications services, provision of parking spaces services or logistics services which will be at the rate of 6%. Service Tax (Rate of Tax) (Amendment) Order 2024 can be obtained from the following link – PU(A) 64

2.  Amendment to Service Tax Regulations on Expansion of Scope of Service Tax to Include Maintenance or Repair and Logistics Services

Reference is made to FMM’s Circular CD/6/2024 dated February 15, 2024 on the Transitional Guidelines on Changes to Service Tax Effective March 1, 2024. The Service Tax Regulations has been amended effective February 26, 2024, on the expansion of the service tax to include the following services:

a. Expansion of Group G to include provision of any Maintenance or Repair Services including maintenance management, corrective maintenance, preventive maintenance, calibration, adjustment, recondition, reconfigure or overhaul.

The following services are excluded from the service tax:

1. Maintenance management services related to land or building for the use of residential provided by any developer, joint management body, management corporation or residential association; or
2. Repair services on residential buildings.

b. New Group J introduced for provision of logistics services including all or part of the supply chain of logistic management services, warehousing or warehousing management services, freight forwarding services, port or airport services, shipping services, aviation services or cold chain facilities services. The delivery, distribution or transportation of goods services as well as documents or packages services through the E-Commerce platform or on behalf or other person or courier services is also taxable.

Exemption of the service tax will however be granted to the following services:

1. Outside Malaysia - Delivery, distribution or transportation of goods including courier services of documents, packages or goods from a place outside Malaysia to a place outside Malaysia.
2. Export – Delivery, distribution or transportation of goods including courier services of documents, packages or goods from the last point of exit within Malaysia to a place outside Malaysia. Foreign shipping line services used for export shipments are not subject to tax.
3. Import - Delivery, distribution or transportation of goods including courier services of documents, packages or goods from a place outside Malaysia to the first point of entry within Malaysia. Foreign shipping line services used for import shipments are not subject to tax.
4. Transshipment – Delivery, distribution or transportation of goods including courier services of documents, packages or goods which arrives at the Malaysian customs port or airport for the purposes of transfer or unloading from an aircraft or vessel to another aircraft or vessel or to a customs warehouse, or a licensed warehouse, or a warehouse or other places approved by the Director General until the goods are transported in the aircraft or vessel and transported out of Malaysia. All transshipments activities including to and from Sabah and Sarawak with Peninsular Malaysia using Customs Form K3 will not be taxable.

The detailed amended Service Tax Regulations can be obtained from the following link - https://lom.agc.gov.my/act-view.php?type=pua&language=BI&no=P.U.%20(A)%2062/2024

For enquiries, please contact Ms Farah Nabilah of the FMM Secretariat at Tel: 03-62867321 or Email: farah_nabilah@fmm.org.my