In addition to the introduction of Service Tax on digital services provided by foreign service providers (refer to article in Indirect Tax News Issue 3/2019 - October 2019), the scope of taxable services subject to Service Tax has been expanded. Under the Service Tax (Amendment) (No. 2) Regulations 2019, the following services are subject to Service Tax with effect from 1 January 2020:
In view of the expansion of the scope of the Service Tax and to address the double taxation of consumers (cascading effect), the Malaysian Government has extended the scope of the Service Tax exemptions as follows:
In view of the above, businesses should review their current business activities to identify any additional Service Tax obligations (for example, registration and compliance related to digital services) from the expansion of the scope of Service Tax. Businesses could also explore opportunities from the extension of the group relief and the new B2B Service Tax exemptions.