EY Indirect Tax Alert: Remission of penalty for outstanding GST payable, Issuance of the Service Tax Policy No. 2/2021 and Amendments to the Indirect Tax Orders
EY has outlined the key highlights of the following Indirect Tax updates as at 1 July 2021:
Remission of penalty for any outstanding Goods and Services Tax (GST) payments made between 1 May 2021 and 31 August 2021
The Royal Malaysian Customs Department (RMCD) has offered to grant remission of penalties to any company that remits the relevant outstanding tax and/or penalty payments to the RMCD during the period from 1 May 2021 to 31 August 2021, subject to the following prescribed conditions:
Categories | Conditions | Eligibility for the remission of penalty offer |
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Application for the remission of penalty can be made via the Taxpayer Access Point (TAP) portal, through the “Request for Remission” link. Such applications are required to include the following documents:
► Application letter for the remission of penalty
► Proof of payment
► GST account statement prior to the repayment
Service Tax Policy No. 2/2021
The RMCD has recently released a Service Tax Policy No. 2/2021 (STP 2/2021) via the MySST portal, which supersedes Service Tax Policy No. 9/2020 (as amended) and provides clarification regarding service tax exemption on the provision of accommodation premises effective 1 July 2021, in accordance with the Program Strategik Memperkasa Rakyat dan Ekonomi (PEMERKASA).
The salient points of the Policy are as follows:
► The service tax exemption on accommodation services provided under Item (a), Group A: Accommodation, First Schedule of the Service Tax Regulations (STR) 2018 has been extended until 31 December 2021.
► However, the service tax exemption does not apply to other taxable services provided by the operator of accommodation premises, as stipulated under Items (b), (c) and (d), Group A: Accommodation, First Schedule of the STR 2018, for example, parking, food and beverage, and rental of venue, amongst others. As such, these services are subject to 6% Service Tax with effect from 1 July 2021.
► In addition, operators of accommodation premises are required to comply with the following:
► Invoices are still required to be issued, and the same should clearly indicate that the corresponding service tax is “0%” or “exempt”
► To furnish the respective SST-02 return within the stipulated timeline
► To indicate the total service tax exempted under Column 18(c) of the SST-02 return
► With respect to the accommodation services provided from 31 December 2021 to 1 January 2022, the service is exempted from service tax.
Amendments to the Indirect Tax Orders
We wish to inform you that the following Orders were published in the Official Gazette, whereby these Orders will take effect from 1 July 2021:
Customs Duties (Exemption) 2017 (Amendment) Order 2021
Sales Tax (Persons Exempted From Payment of Tax) (Amendment) (No. 2) Order 2021
Excise Duties (Exemption) (Amendment) Order 2021
Excise Duties (Exemption) (Amendment) (No. 2) Order 2021
The amendments focus on the following persons entering Malaysia who purchase exempted goods (subject to meeting the prescribed conditions):
► Any person entering Malaysia (other than Labuan, Langkawi, Tioman and Pangkor) through all modes, excluding air mode
► Any person entering Malaysia (other than Labuan, Langkawi, Tioman and Pangkor) by air mode
► Any person entering Malaysia from Labuan, Langkawi and Tioman
The amendments should apply to all the persons mentioned above, unless specified. With that, please find below the salient points of the amendments to the above-mentioned Orders, for your kind attention:
| Legislations | Key amendments |
| (A) Customs Duties (Exemption) 2017 (Amendment) Order 2021 (B) Sales Tax (Person Exempted from Payment of Tax) (Amendment) (No. 2) Order 2021 (C) Excise Duties (Exemption) (Amendment) Order 2021 | · Removal of exempted prescribed goods Tobacco products not exceeding 225 grams (equivalent to 200 sticks of cigarettes) have now been removed from the list of exempted prescribed goods.
In view of this, the importation of tobacco products is now subject to excise duty, import duty and sales tax.
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| (A) Customs Duties (Exemption) 2017 (Amendment) Order 2021 (B) Sales Tax (Person Exempted from Payment of Tax) (Amendment) (No. 2) Order 2021 (C) Excise Duties (Exemption) (Amendment) (No. 2) Order 2021 | · Review of conditions for any person entering Malaysia from Labuan, Langkawi, Tioman and Pangkor Previously, any person entering Malaysia from Pangkor is required to have stayed in Pangkor for a period of not less than 48 hours in order to be eligible for the exemption (subject to meeting other conditions).
This has now been reduced to 24 hours. |
| (A) Customs Duties (Exemption) 2017 (Amendment) Order 2021 (B) Sales Tax (Person Exempted from Payment of Tax) (Amendment) (No. 2) Order 2021 | · Clarification of “other” exempted goods The amendment has clarified that all goods other than those specified, where the total value is less than the prescribed value of RM500 or RM1,000, are eligible for exemption except for the following items: ► Tyres and tubes ► Cigarettes ► Tobacco products ► Smoking pipes (including pipe bowls) ► Electronic cigarettes and similar personal electric vaporizing devices ► Preparation of a kind used for smoking through electronic cigarettes and electric vaporizing devices, in the form of liquid or gel, not containing nicotine |
| (A) Sales Tax (Person Exempted from Payment of Tax) (Amendment) (No. 2) Order 2021 | · Streamlining the amendments to Item 16 across three (3) legislations · Item 16 has been renamed to “Any person entering Malaysia (other than designated area) through all modes, excluding air mode” for consistency. · The prescribed conditions for Item 16 have also been amended, in line with the conditions prescribed under Item 10 of Customs Duties (Exemption) 2017 (Amendment) (No. 2) Order 2020 and Item 36 of Excise Duties (Exemption) 2017 (Amendment) Order 2020. · New provision · Item 16A [i.e., any person entering Malaysia (other than designated area) through air mode] has been included, in line with the same provisions initially introduced in Customs Duties (Exemption) 2017 (Amendment) (No. 2) Order 2020 and Excise Duties (Exemption) 2017 (Amendment) Order 2020. |
The full and complete version of the above-mentioned announcement and Service Tax Policy (only available in Bahasa Melayu at this juncture) can be found in the MySST Portal, while the legislations can be found in the Official Federal Gazette.
