Malaysia Service Tax (Amendment) Regulations 2019 gazetted

On 30 August 2019, the Service Tax (Amendment) Regulations 2019 (the regulations) providing certain amendments to the Service Tax Regulations 2018 (the principal regulations) were gazetted. The regulations entered into force on 1 September 2019. 

The main amendments to the regulations are set out below.

  • A definition of "courier service" has been included.
  • A formula has been provided to determine the value of taxable services where payment for taxable services is made to any machine or a device operated by coins, etc.
  • The following additional particulars are required in the invoices issued by a registered person for the provision of any taxable service to a customer exempted from payment of service tax under section 34 of the Service Tax Act 2018:

       - name and address of the customer;
       - the customer's service tax registration number; and
       - the customer's total amount of service tax that is exempted.
  • Only one application for registration is required if a taxable person in any prescribed group of taxable persons and services provides two or more taxable services specified in different prescribed groups, and the value of each taxable service exceeds the total prescribed threshold in the First Schedule of the principal regulations.
  • Where a company in a group of companies acquires any taxable services specified in items (a), (b), (c), (d), (f), (g), (h) or (i) of Group G (Professionals) in the First Schedule of the principal regulations from any company within the same group of companies outside Malaysia, such services will not be considered imported taxable services.
  • Certain amendments have been made to the list of taxable services provided in the First Schedule of the principal regulations.
  • New forms are provided replacing the previous Form SST-01, Form SST-02 and Form SST-02A of the principal regulations.

Finance Bill 2019 – further details

  • Further to the announcement of the Budget for 2020, the Finance Bill 2019 (the bill), which provides amendments to the Income Tax Act 1967, Real Property Gains Tax Act 1976, Stamp Act 1949, Petroleum (Income Tax) Act 1967, Sales Tax Act 2018, Finance Act 2010 and Finance Act 2018, was tabled for the first reading in the parliament on 15 October 2019.

  • The salient points from the bill, which will be effective from 1 January 2020 unless otherwise stated, are set out below

Income tax

  • Small and medium-sized enterprises (SMEs) will be taxed at 17% on the first MYR 600,000 of chargeable income (instead of the current MYR 500,000 threshold).
  • SMEs will be defined as a company with paid-up capital of MYR 2.5 million or less at the beginning of the basis period of the year of assessment and with gross income not exceeding MYR 50 million for the basis period for that year of assessment.
  • A tax rebate equivalent to the departure levy, limited to two claims per year of assessment, will be given to individual taxpayers for the purpose of performing umrah or other religious pilgrimage.
  • The tax deduction on expenditure for sponsoring any approved arts, cultural or heritage activity under section 34(6)(k) of the Income Tax Act 1967 will be increased from MYR 700,000 to MYR 1,000,000.
  • The tax deduction for a gift of money or contribution in kind for the specific purpose of an establishment, sports activity or project of national interest for a company or person other than a company will be streamlined to be capped at 10% of aggregate income. 
  • The assessment and additional assessment under the case of mutual agreement procedure will have no statute of limitation.
  • The amount of small-value assets (SVAs) which qualifies for capital allowance for an SVA will be increased to an amount not exceeding MYR 2,000 per asset, and the maximum amount restriction will be increased to MYR 20,000.
  • Resident individual taxpayers with taxable income above MYR 2 million will be taxed at a scaled rate with the new maximum rate of 30%. Non-resident individuals will be taxed at a flat rate of 30%.
  • The scope of serious diseases relief (with the tax relief amount up to MYR 6,000) will be expanded to include medical costs related to fertility treatment.
Real property gains tax (RPGT)

With respect to the acquisition of assets prior to 1 January 2013, the acquisition price of the assets will be deemed to be the market value as at 1 January 2013 for RPGT purposes.

Stamp duty

The maximum stamp duty payable for a loan in foreign currency will be increased to MYR 2,000.

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