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Feb
28
Service Tax Revision from 6% to 8% Effective 1st March 2024

 

Dear Valued Customers,

The Minister of Finance has set the service tax rate to be increased from 6% to 8% from 1st March 2024 on all existing taxable services.

In line with the increase of the service tax rate, the Royal Malaysian Customs Department has released the draft Guide (“the draft Guide”) on Transitional Rules of Service Tax Rate dated 7 February 2024.

In accordance with the draft Guide on the Transitional Rules for the Change in the Service Tax Rate:

  • The applicable Service Tax rate to be based on the date the taxable services are performed. (6% before 1 March 2024 and 8% on/after 1 March 2024)
  • For taxable services spanning 1 March 2024, apportionment to be made accordingly.
  • Exceptional rule for payment made before 1 March 2024 in relation to taxable services to be provided on/after 1 March 2024, Service Tax rate remains at 6%.

The following are examples of scenarios involving taxable services spanning 1 March 2024. The service tax rate applicable on the taxable services will be as follows:

  Before 1 March 2024 On/After 1 March 2024    
  Services provided Invoice issued Payment made Services provided Invoice issued Payment made Value of taxable services Service tax rate
  RM RM RM RM RM RM RM %
 Scenario 1         2,000      12,000      12,000      10,000            -                     12,000 6%
 Scenario 2         2,000      12,000            -        10,000            -        12,000                   2,000 6%
                            10,000 8%
 Scenario 3         2,000      12,000        6,000      10,000            -          6,000                   2,000 6%
                              4,000 6%
                              6,000 8%

 Therefore, we highly encourage customers to make full payment, for taxable services spanning 1 March 2024, before 1 March 2024.

In compliance with this regulation, we will be updating our invoices from 6% to the new 8% SST rate effective 01st March 2024.

With the increase in service tax imposed by RMCD, we reserve the right to collect any undercharged service tax for invoices issued before 1 March 2024 for taxable services spanning on/after 1 March 2024. 

Please note that the draft Guide is still under review by the Ministry of Finance, hence subject to changes, until the relevant legislation is gazetted.

For further information regarding this adjustment, kindly visit https://mysst.customs.gov.my/

We appreciate your cooperation during this transition period. If you have any questions or need further clarification, please feel free to reach out to our Contact Centres via email at billing@webserver.com.my

Thank you. 
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