During the period 1st September 2018 to 31st December 2018, Malaysian service providers were in a disadvantage as they had to charge 6% service tax to their customers on provision of taxable services. However, these customers would not incur any service tax if they had purchased the same service from a foreign provider.
Now foreign services are being charged under service tax on imported services.
Where if the customer is service tax registered, the service tax on imported services is to be accounted in the bimonthly service tax return. And if the customer is not service tax registered, the service tax on imported services is to be accounted for in a declaration which is required to be submitted by the end of the month which follows the month in which the service tax is due.
And the service tax on imported services is due at “the time when payment is made” or “the time when the invoice is received” or whichever is earlier between these two.
For example, ABC Sdn Bhd, a company with a 31st December year-end, acquires consultancy services from a foreign company. On 10th March 2019, ABC Sdn Bhd receives and invoice from the foreign company for RM100,000 in respect of the services in February. The invoice would be paid in full in July 2019.
The Service tax of RM6,000 (being^& of RM100,000) is due on 10th March 2019 (being the earlier of date of payment and receipt of invoice).
If ABC Sdn Bhd is service tax registered, the service tax of RM6,000 must be included in the service tax return for the taxable period March to April 2019, which is due by 31st May 2019. Service tax mst be paid to Customs by 31st May 2019 as well.
If ABC Sdn Bhd is not service tax registered, a special declaration must be submitted by 30th April 2019(being the end of the month that follows 10th March). Service tax must be paid to Customs by 30th April 2019 as well.
For exemption for services within a group of companies and more information,