The Malaysian Ministry of Finance (MoF) has refined the scope for Service Tax exemptions to alleviate the direct impact on the rakyat’s living cost and cascading tax incidences in the logistics sector.
Finance Minister II, Datuk Seri Amir Hamzah Azizan said the Service Tax exemptions for the logistics sector and maintenance services will also help to maintain the competitiveness of the nation’s services sector.
“To further preserve the country’s competitiveness, the government will also not impose Service Tax in free trade zones,” he said in a statement recently, Bernama reported.
To ease the tax impact on daily logistics operating activities, and ultimately the consumers, the government has agreed on the amendments to Group J: Logistics Services in First Schedule, Service Tax Regulations 2018.
“Item 1(a) in relation to logistics services, and Item 1(b) on delivery or distribution or transporting services have been merged into a single item.
“By combining the two items into one, the exemption scope for business-to-business (B2B) activities has been widened whereby logistics service providers classified under Item 1(a) are now no longer required to incur Service Tax for acquiring delivery or distribution or transporting services previously listed under Item 1(b),” it said.
Previously, logistics service providers under Item 1(a) were entitled to tax exemptions for acquiring services under the same item only, the ministry said.
MoF added that all services under Group J: Logistics Services provided in or between Special Area/Designated Area are not subject to the Service Tax, except for Customs Agent services where the tax remains applicable.
“The Free Commercial Zones and Free Industrial Zones such as the Port Klang Free Zone and West Port in Selangor, as well as the Pasir Gudang Port in Johor, shall benefit from this exemption,” it said.
MoF said the government also provided an exemption for ocean freight charges for all goods delivered by sea, limited to deliveries from Peninsular Malaysia to Sabah/Sarawak/Labuan; Sabah/Sarawak/Labuan to Peninsular Malaysia; and between Sabah, Sarawak, and Labuan.
These enhancements are additions to the widening of Service Tax exemption scope for logistics sectors announced on March 11, 2024, it said.
Besides that, MoF said the Service Tax exemptions also apply to maintenance services for repairs of residential buildings; sinking funds and maintenance services related to land or buildings for residential purposes provided by developers, joint management bodies, or resident associations.
“With this, all maintenance and repair services at residential premises such as roof upgrades or for any item and fixture attached to or part of the residential premise’s structure such as lifts, air conditioners, and water heaters are not subject to Service Tax,” MoF said.
The ministry emphasised that the increase of the Service Tax rate from 6.0 to 8 per cent that came into effect on March 1 is concentrated on services that are discretionary in nature and B2B activities that do not directly impact the rakyat.
The increase does not involve key essential services that are part and parcel of the rakyat’s lifestyle such as food and beverages, telecommunications and vehicle parking, it added.
Iin News, Supply Chain, Transportation. 4 April 2024.
Source: Logistics Asia. https://logistics.asia/malaysia-refines-service-tax-exemptions-to-boost-logistics-sector-competitiveness/. 7 April 2024.
Malaysia faces new US risk from BRICS ties PETALING JAYA: Malaysia may have to grapple with fresh uncertainties amid a decision by the United States to impose an additional 10% default tariff on any country seen as aligning with “the anti-American policies of BRICS.” This development comes as the July 9 tariff deadline looms and follows the recent BRICS Summit [...]
How AI & Analytics are Transforming Supply Chain Resilience [Part 2 of 2] Real-world success stories The transformative impact of AI and predictive analytics is already evident in organisations that have embraced these technologies. Martin highlights Penske as a compelling example: "Penske, a leader in logistics and supply chain management, is a great example of how data analytics can support [...]
How AI & Analytics are Transforming Supply Chain Resilience [Part 1 of 2] Martin Tombs, Field CTO for the EMEA region at Qlik, says the ability to anticipate disruptions has become a defining factor in organisational success In an era defined by volatility and unprecedented challenges, supply chains face mounting pressures from all directions. The ability to anticipate and mitigate [...]
Scroll To Top