EY Indirect Tax Alert: Extension of Deadline for the Submission of Indirect Tax Return and Payment, Updated Service Tax Guides and Service Tax Policy No. 10/2020
EY has outlined below the following Indirect Tax updates:
A. Extension of deadline for the submission of the SST-02 return and payment for the May to June 2021 taxable period
► The Royal Malaysian Customs Department (RMCD) recently announced that the deadline for the submission of the SST-02 return for the May to June 2021 taxable period has now been extended to 31 August 2021.
► A full penalty remission is available to taxpayers upon application in writing to the RMCD, provided that the said returns and payments are submitted to RMCD no later than 31 August 2021.
B. Updated Service Tax Guides
In addition, the RMCD recently released the following updated Guides via the MySToDS and MySST portals:
► Guide on Application for Refund by Foreign Registered Person as at 2 August 2021
► Guide on Management Services as at 4 August 2021 (only available in Bahasa Melayu at this juncture)
► Guide on Transmission and Distribution of Electricity Services as at 4 August 2021 (only available in Bahasa Melayu at this juncture)
► Guide on Group C: Night Clubs, Dance Halls, Cabaret, Health Centres, Massage Parlours, Public Houses and Beer Houses, Group D: Private Club, and Group E: Golf Club and Golf Driving Range as at 4 August 2021 (only available in Bahasa Melayu at this juncture)
► General Guide on Service Tax as at 4 August 2021 (only available in Bahasa Melayu at this juncture)
The salient details of the aforementioned updated Guides are as follows:
- Guide on Application for Refund by Foreign Registered Person (FRP) as at 2 August 2021
| Circumstances that a FRP may make a claim for refund | ► The FRP may submit a claim for refund, in the following scenarios: ► Where a FRP has overpaid or erroneously paid any service tax, penalty, surcharge, fee or other money; or ► Where a FRP is entitled to the refund according to Section 34(6) (i.e. Minister’s exemption) or Section 40(3) (i.e. remission of tax) of the Service Tax Act 2018. |
| Procedure to submit a claim for refund | ► The application for refund shall be made electronically by completing the DST-ADM01 form in the MySToDS portal and submitting the relevant supporting documents accordingly for each of the relevant taxable periods.
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| Duration to claim for refund | ► The FRP shall submit the claim for refund within one (1) year from the time: ► Such overpayment or erroneous payment occurs; or ► Such entitlement for the refund under Section 34(6) or 40(3) of the Service Tax Act 2018 occurs.
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| Method of refund | ► The Guide provides that the FRP may choose to either carry forward the refund to offset against any payable amount or have the refund amount credited into the FRP’s bank account.
► In order for the FRP to carry forward the refund to the subsequent taxable period, the FRP must submit the application for refund before the 16th day of the tax return submission month. For example, in order to carry forward the refund, as a result of overpayment, from the January to March 2021 taxable period to the next taxable period (i.e., April to June 2021), the FRP must submit the refund application before 16 July 2021.
► An FRP who chooses to have the refund amount credited into a bank account must ensure that all information provided in the DST-ADM01 Form (e.g., name of bank, bank account number, SWIFT code, etc.) is accurate and correct, as the refund will be made via cross-border fund transfer. Kindly also note that RMCD does not allow for refunds to be credited into a third-party’s bank account.
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- Guide on Management Services as at 4 August 2021
| Maintenance management services | ► The RMCD has provided additional clarification on the service tax treatment on maintenance services, as follows: ► Example 4 – Building maintenance management services provided by a joint management body (JMB) or a management corporation (MC) to the building owner is subject to service tax. ► Example 5A – Separate maintenance management charges for the use of common areas in a commercial building are not subject to service tax. However, should the maintenance management services be provided for areas which are being leased by tenants, such charges are subject to service tax.
► In summary, RMCD has adopted the following position with regard to service charges by owners of commercial buildings: ► Non-itemized charges (Example 5) ► Rental including maintenance services – not subject to service tax as not a taxable service ► Itemized charges (Example 5A) ► Rental only – not subject to service tax as not a taxable service ► Maintenance services (common areas) – not subject to service tax as not a taxable service ► Maintenance services (tenants outlet(s)) – subject to service tax as taxable service
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| Business to business (B2B) exemption | ► The Guide has been updated to reiterate that the service provider and the recipient of the taxable service are both required to be registered persons under the Service Tax Act 2018, which is now in line with the B2B exemption under Item 1, Schedule of the Service Tax (Persons Exempted from Payment of Tax) Order 2018. |
3. Guide on Transmission and Distribution of Electricity Services as at 4 August 2021
| Service tax treatment on electricity usage and billing cycle | ► The RMCD has clarified that the service tax exemption on the first 600kWh of electricity usage is only granted to a billing cycle that is not less than 28 days.
► The table below clarifies the service tax treatment:
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4. Group C: Night Clubs, Dance Halls, Cabaret, Health Centres, Massage Parlours, Public Houses and Beer Houses, Group D: Private Club, and Group E: Golf Club and Golf Driving Range as at 4 August 2021
| Service tax treatment on rehabilitation services | ► The RMCD clarified that rehabilitation services, including physiotherapy and occupational therapist services, are subject to service tax. An exemption from service tax is granted to operators registered under the Private Healthcare Facilities and Services Act 1998, any Government healthcare facility, or any facility managed by any university established under the Universities and Colleges University Act 1971 or the Mara University of Technology Act 1976.
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5. General Guide on Service Tax as at 4 August 2021
The General Guide provides an overview of the Malaysian Service Tax regime. The same has been updated to reflect the various changes to the Service Tax legislation. The following guidance has been provided by the RMCD with respect to administrative matters:
► Any updates to the registration information of the registered person should be notified in writing to the Director General (e.g., additional taxable services provided or discontinuation of provision of taxable services).
► Invoices for the provision of taxable services by a registered person have to be issued within one (1) year from the date the taxable service is provided, or within any extended period as may be approved by the Director General.
C. Amendments to the Service Tax Policy No. 10/2020 (STP 10/2020)
► The Policy has been updated to provide that the provision of digital services by local service providers is a prescribed taxable service under Item (l), Group G, First Schedule of the Service Tax Regulations 2018 effective 1 January 2020, which is in line with the amendments made to the Service Tax Regulations 2018.
► The amendment further clarifies that digital services in relation to withdrawals or transfers of funds from one bank account to another are exempted from service tax, where service charges are charged separately to the account holder. Such service includes the following:
► Provision of digital services to initiate transfers or withdrawals of funds, where fees are charged to the service recipient (bank account holder).
► The fee charged refers to the fee for the withdrawal or transfer of funds only.
► The fee is charged directly to the service recipient (bank account holder).
The full and complete version of the above-mentioned announcement, Guides and amended Policy issued by the RMCD can be found in the MySToDS Portal and MySST Portal.
