You Need to Make Sure That You Are Aware of All the Information About Malaysia SST Sales & Services Tax as an Investor
The Prime Minister of Malaysia re-introduced the Sales and Service Tax (SST) on September 1 after it was approved in August 2018. The challenge for business owners at this point is assessing their services whether they are taxable or not. This exercise is initial, but having a list of imported services that are updated and important tax treatment is important.
It can be said that in certain cases, the service tax and withholding tax is applicable in the same case. The company that is inside the group of companies is generally applicable to imported services. But the B2B exemption is not possible.
Any business that imports taxable services need to have an account with the Customs department.
Business Requirements for the New SST
When the GST act was repealed, companies do not have to apply for deregistration. But there is no need to submit their final GST returns within the 120 days of repealing.
The businesses in Malaysia should first undergo an assessment to find out if they should have SST. The manufacturers and providers of their service who were registered in the GST are identified and registered automatically under the new rules. They are now going to charge SST to customers. The company’s accounting partner should be told if you are already automatically registered. It can also happen through the MySST system.
Generally, the services that provide a taxable service under the Service Tax Act 0f 2018 should register when the value of their taxable services exceeds RM500,000 over a period of 12 months. The threshold of SST for operators of restaurants, canteens, bars, cafes, or other places that can provide food and drinks that are subject to RM1,500,000.
They have a fixed tax rate of 6%. The services subject to this tax rate are hotels, gaming, insurance, legal and accounting services, parking, employment agencies, advertising, couriers, and electricity.
The Sales Tax computation is at the import or levels of manufacturing. Companies that have a sales value of taxable goods that exceed RM500,000 over 12 months should be registered, which are levied from 5% to 10% depending on the goods. Opticians, tailoring, and jewellers are exempted from the SST registration.
Companies that registered for the SST should file a report every 2 months, and the first taxable period is from September to October 2018. The SST-02 return should be submitted on or before the last day of the month that follows the taxable period.
The Malaysia Service Tax Amendment Regulations for 2019
Here are the main amendments:
- The meaning of courier service is already included
- They have already provided the formula in determining the value of taxable services. It is where the payment should be made to a machine or device that uses coins, etc
- There are additional particulars that should be in the invoices that were issued by someone who is registered for the provision of a taxable service. These invoices are issued to someone who is exempted from payment of the service tax under the Service Tax Act 2018 section 34. They should provide their name and address, the service tax registration of the customer, and the total amount of the customer’s service tax that was exempted.
- They only require one registration application if a taxable person from a prescribed group of taxable persons and services that provides at least two taxable services has exceeded the total threshold that was prescribed during the First Schedule of principal regulations
- When a company or companies have acquired the specified taxable services during the first schedule of principal regulations from a company within the same group outside Malaysia. These services are not recognized as imported taxable services
- Particular amendments were already made. It is based on the taxable services list that was provided during the First Schedule of principal regulations
- There are new forms provided that replaces the previous SST-01 form, SST-02 and Form SST-02A
Filing Sales Tax Returns
As part of the SST, the businesses that are registered are expected to file the tax returns twice a month. The filing of returns must be done not later than the last day of that month that follows the taxable period. Here is the late returns penalty:
- 10% over a period of the first 30 days
- 15% over a period of the second 30 days
- 15% for the third 30 days
- A maximum 40% penalty after 90 days
- The sales tax gets charged on the taxable goods which are made in Malaysia or imported there. The exported manufactured goods are not subject to sales tax.
- The tax rate will be 5%, 10%, a specified rate, or an exemption. The goods should be taxed unless they are mentioned as part of the exemption.
- The sales tax is a single-stage tax
- In order to maintain the single-stage rule, manufacturers of the taxable goods are generally entitled to sales tax exemptions that are paid on raw materials, packaging materials, and components
- Services tax is only for specific prescribed services brought in by someone who carried business in Malaysia
- The service tax rate is 6%
- The service tax is also a single-stage tax that is charged only once by a service provider
- The services included are restaurants, hotels, gaming, telecommunications, consultancy, motor vehicle repair, domestic flights, credit cards, electricity, and IT services
These are the information you need to know about the SST in Malaysia. So you will not have an issue about tax filing, or whether you should. Make sure that you know everything before investing and starting your business operations.