New service tax rate

29 February 2024
Dear Valued Customer,
NOTIFICATION ON IMPLEMENTATION OF SERVICE TAX OF 8%
In accordance with the directive by the Royal Malaysian Customs Department (Customs) for the implementation of a Service Tax of 8% effective 1 Mac 2024 on all taxable services excluding food and beverage services, telecommunication services, provision of parking space services, and logistics services, we wish to update our customers on the following:
1. Service Tax rates in invoices:
TM Technology Services Sdn Bhd (TM) is licensed under Service Tax Act 2018 with Service Tax Registration ID (ST ID): W10-1808-32000464 for the following taxable service types and its corresponding Service Tax rates are as follows:
No Taxable Service Type Group Tax Rate prior to 1 March 2024 (%) Tax Rate after 1 March 2024 (%)
1 Telecommunication I 6 6
2 Advertising I 6 8
3 Management G 6 8
4 IT Providers G 6 8
5 Consultancy G 6 8
6 Training and Coaching Services G 6 8
7 Digital Service & Electronic Medium G 6 8
Tax codes:
ST – Service Tax rate at 6%
S8 – Service Tax rate at 8%
2. Non-taxable telecommunication services to Licensed Telecommunication Service Providers:
As per Service Tax Regulations 2018 dated 29 August 2018, telecommunication services are not taxable between Licensed Telecommunication Service Providers in Malaysia as well as between a Malaysian Telecommunication Service Provider with foreign Telecommunication Service Providers.
Kindly note that there is no change to the above with the implementation of a Service Tax of 8%.
3. Transitional rules based on the Customs Guide on change in Service Tax Rate:
No Scenario Transitional Rules
1 If Purchase Order (PO) is issued before 1 March 2024 but the supply/service is delivered after 1 March 2024, will additional Service Tax be added to the supply/ bill?

If PO is issued before 1 March 2024 for services that are subject to 8% but delivered after 1 March 2024, the supplies will be subjected to Service Tax at 8%.

The rate of Service Tax is determined based on when the service is provided to customers i.e.:

  • If provided before 1 March 2024 – 6%
  • If provided on or after 1 March 2024 – 8%
2 I have not been invoiced but have made full payment for services that are provided on or after 1 March 2024. Will I be charged with 6% or 8% in my Bill?

For services provided on or after 1 March 2024:

  • This will be subject to the new Service Tax rate of 8%.
  • However, if full payment was made/received before the effective date, the Service Tax rate will remain at 6%.
3 I have services spanning the effective date, what is the rate of service tax?

For services spanning the effective date, the Service Tax will need to be apportioned based on the service duration:

  • Portion before the effective date – 6%
  • Portion on or after the effective date – 8%

If the full payment was made/received before the effective date, the Service Tax rate will remain at 6%.
4 I am billed for services subject to service tax at 8% after 1 March 2024 for usage before 1 March 2024. Will I be charged with 6%?

Yes, before 1 March 2024, the service is subject to 6%.

However, if you are billed with 8%, a Service Tax credit adjustment/ credit note will be issued to you.
5 I am not billed for services subject to service tax at 8% for supplies used on/ after 1 March 2024. Will I be billed with service tax at 8% in my next bill? Yes, a debit adjustment/ debit note for 8% will be issued on your next bill.
4. Other concerns:
No Concern Response
1 If my contract is a bundled contract with services subject to 6% and 8%, what is the tax rate for the contract? The billing charges for your contract will be segregated with services charged at different Service Tax rates depending on the taxable service.
2 If my contract is bundled with complimentary services (taxable at 8% if purchased separately) will I be charged with the tax?

No, complimentary services that are provided as a packaged price to the contract are not subject to Service Tax.

In addition, any complimentary services provided with a package will not be billed to your bill.
3 Will the quote provided to me specify the rate of tax?

Yes, quotations provided to you will be specified with the tax rates for each service type.

Example:

  • Telecommunications (ST)
  • IT services (S8)
  • Equipment (NT)
  • Installation of network infrastructure (NT)

We hope the explanations provided above will help shed some light to address your queries on the implementation of a Service Tax rate of 8% for our supplies to you.
Enclosed please find a Frequently Asked Questions (FAQ) to help facilitate any further queries you may have.
Frequently Asked Questions
For more information, please refer to the relevant documents available on the Customs Department’s website, or feel free to contact your respective Account Manager should you require any further clarification.
Thank you
Yours sincerely,
SHAZURAWATI BINTI ABD KARIM
EXECUTIVE VICE PRESIDENT
TM ONE
Copyright @ TM TECHNOLOGY SERVICES SDN. BHD. (Company No. 200201003726 (571389-H)). All Rights Reserved.
Contact Us
magnifiercrossmenuchevron-up