Indirect Tax Alert: Service Tax Policies Updates (1 September 2020)

The Royal Malaysian Customs Department (“RMCD”) has recently released several amendments to the existing Service Tax Policies via the MySST portal, to be in line with the amendments made under the Service Tax (Amendment) Regulations 2020 and Service Tax (Digital Services) (Amendment) Regulations 2020.

Please find below the salient amendments for your attention:

Policies	Key amendments
Service Tax Policy No. 1/2020	► The Policy has been amended to update the wording of the taxable services under item (l), Group G, First Schedule of the Service Tax Regulations 2018 on the provision of digital services, including the provision of an electronic medium that allows suppliers to provide supplies to customers or transactions for the provision of digital services on behalf of any person, excluding the provision of such services in relation to matters outside Malaysia, which is in line with the Service Tax (Amendment) Regulations 2020. ► The amendment is effective from 14 May 2020.
Service Tax Policy No. 3/2020	► The wording “Foreign Service Provider (FSP)” has been replaced with “Foreign Registered Person (FRP)”. ► The amendment is effective from 1 January 2020.
Service Tax Policy No. 4/2020	► The Policy has been amended to clarify that digital service is a taxable service under the Service Tax Act 2018. ► The amendment is effective from 1 January 2020.
Service Tax Policy No. 5/2020	► The Policy has been amended to clarify that digital service is a taxable service under the Service Tax Act 2018. ► The amendment is effective from 1 January 2020.
Service Tax Policy No. 8/2020	► The Policy has been amended to include intragroup relief provisions for a Foreign Registered Person (“FRP”), which is in line with the Service Tax (Digital Services) (Amendment) Regulations 2020. ► The qualifying services for intragroup relief which applies to a local service tax registered person, have been updated to include item (l) – the provision of digital services, including the provision of an electronic medium that allows suppliers to provide supplies to customers or transactions for the provision of digital services on behalf of any person, excluding the provision of such services in relation to matters outside Malaysia, which is in line with the amendments made in the Service Tax (Amendment) Regulations 2020. ► Paragraph 4 of the Policy provides guidance on calculating the value of the same taxable service to third parties for intragroup relief purposes. In this regard, the wording “eleven months immediately preceding” has been replaced with “eleven months immediately succeeding” for clarity purposes. ► The amendments are effective from 14 May 2020, except for Paragraph 4, which is deemed effective from 1 January 2020.

The full and complete version of the Service Tax Policy amendments issued by the RMCD can be found in the official link of the MySST Portal.