Indirect Tax Chat – January 2020

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Indirect Tax Chat

Keeping you up to date on the latest news in the Indirect Tax world

January 2020

Indirect Tax Chat – January 2020

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Issue 1.2020

Quick links: Contact us - Our Indirect Tax team

Key takeaways:

1. Amendments to Sales Tax legislation

2. Amendments to Service Tax legislation

3. New Service Tax policies

Indirect Tax Chat – January 2020

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Greetings from Deloitte Malaysia’s Indirect Tax team Greetings dear readers and welcome to the January edition of Indirect Tax Chat, our first edition of the new year.

As I mentioned in our December 2019 edition, there were a number of

amendments and updates released prior to Christmas. This was followed

by further updates just prior to the new year. These changes were

significant as it broadened the scope of the sales tax and service tax

(“SST”) regime and introduced new exemptions. The list of indirect tax amendments can be

found here. We also cover a number of technical updates including the release of new service

tax policies further below.

1 January 2020 also marked the commencement of the service tax on digital services (“SToDS”)

for foreign service providers in Malaysia. We understand that over 250 foreign service providers

have registered for the tax to date and authorities are anticipating that this number will increase

in the coming months. The Royal Malaysian Customs Department (“RMCD”) have also confirmed

two new administrative concessions in relation to reporting and invoicing for the SToDS. We

cover this further below.

Separately, here are some recent news which may interest you:

Regarding SToDS, the RMCD have provided two concessions. The first concession is the choice to account for SToDS using an accrual basis or using a payments basis. The second concession is in relation to invoicing requirements, where registrants of SToDS have a

choice to state the SToDS as an inclusive amount, or as a separate amount, from the total amount payable. Having said that, we would like to highlight that the current legislation

requires that SToDS be accounted using a payments basis, and that invoices in respect of SToDS must state the SToDS as a separate amount from the total amount payable.

In our December 2019 tax chat, we shared that the total collection for SST from January to October 2019 amounted to RM22.6 billion. The Finance Minister Lim Guan Eng has

announced for the full 2019 year, the total SST collection is RM27.5 billion, which surpasses the initial target by more than RM5 billion. For more information, please click here.

We wish all those who are celebrating the lunar new year a very prosperous and happy Chinese New Year.

Best regards,

Tan Eng Yew

Indirect Tax Leader

Indirect Tax Chat – January 2020

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1. Amendments to Sales Tax legislation

Recent key changes to the Sales Tax legislation and our analysis are as below:

Sales Tax Key Changes

Finance Act 2019 –

Introduction of new PART IXA - Special Schemes in the Sales Tax Act 2018

Details of the special scheme - Approved Major Exporter

Scheme Under the newly introduced “Approved Major Exporter

Scheme”, any eligible person will be granted sales tax exemption:

a) on acquisition of taxable goods which are subsequently

exported, or transported to designated areas or special

areas; or

b) on acquisition of raw materials, packing, and packaging materials or components for use in manufacturing of sales

tax exempted goods, which are subsequently exported or transported to designated areas or special areas.

The exemption holder should maintain a record of the goods exempted under the scheme according to the form and

manner as determined by the Director General of the RMCD.

The exemption granted is subject to prescribed conditions.

Non-compliance of any prescribed conditions would render any sales tax exempted to become due and payable from the date

of the non-compliance and sales tax shall be paid in the form and manner as determined by the Director General of the RMCD.

Effective Date: a date to be notified in the gazette.

Deloitte’s comments

No further details on the prescribed conditions have been released at this moment. Export-oriented traders and manufacturers of

exempted goods should monitor the further updates pertaining to this scheme.

Indirect Tax Chat – January 2020

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Sales Tax Key Changes

Sales Tax (Amendment) Act 2019

Appointment of Date of Coming into Operation

Sales Tax (Amendment) Act 2019 came into operation on 1 January 2020.

Deloitte’s comments

You may read our analysis of the changes in our May 2019 edition

of Indirect Tax Chat.

Sales Tax (Persons

Exempted From Payment Of Tax) Order 2018

Schedule A, Item 38 - Amendment

Manufacturers in the Principal Customs Area (“PCA”) may apply

for sales tax exemption on all goods transported to a Free

Industrial Zone (“FIZ”) established under the Free Zones Act 1990 or Licensed Manufacturing Warehouse (“LMW”) under

section 65A of the Customs Act 1967 for further manufacture or to complete its manufacture and subsequently transported back to PCA.

The following condition has been added in column 4:

If the manufacturer in the PCA is not a Sales Tax registrant, sales tax is chargeable on goods which are subsequently

transported back to the manufacturer in PCA (i.e. deemed as an import) based on the amount chargeable for the work

performed.

Effective: 1 January 2020

Deloitte’s comments

The newly added condition for sales tax to be paid only based on

value of service performed for the processed goods that are subsequently transported back into PCA will reduce the manufacturing cost of the non-sales tax registered manufacturer.

Schedule A, Item 54 - Amendment

Any manufacturer in a free industrial zone established under

the Free Zones Act 1990 or any licensed manufacturing

warehouse under Section 65A of the Customs Act 1967 may apply for sales tax exemption on all goods transported out from

a free industrial zone or a licensed manufacturing warehouse for further manufacture or to complete its manufacture.

The condition (b) has been amended to allow the further manufacturing work to be performed by any manufacturer.

Indirect Tax Chat – January 2020

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Sales Tax Key Changes

Condition (f) has been added to require the exemption holder to furnish a return not later than the 10th of each month

according to the form and manner as determined by the Director General of the RMCD.

Effective: 1 January 2020

Deloitte’s comments FIZ and LMW manufacturers can now benefit from a sales tax

exemption for any goods transported to any approved

manufacturer for further processing works. The exemption holder

would need to comply with the monthly reporting requirement.

Sales Tax (Rates Of Tax)

(Amendment) Order 2019

First Schedule – Additional items

The following goods have been added into the category of taxable goods which is subject to sales tax at a rate of 5% (previously subject to sales tax at a rate of 10%):

HS Code Description

3926.90.3900

Other Articles of plastics and articles of other materials of headings 39.01 to 39.14

---Other (baby pacifier whether or not with clip)

7007.29.9000

Safety glass, consisting of toughened (tempered) or laminated glass

---Other

9401.80.0000

Seats (other than those of heading 94.02),

whether or not convertible into beds, and parts thereof

- Other seats (car safety seats for infant and young children).

Effective: 1 January 2020 Deloitte’s comments

The reduction of the sales tax rate from 10% to 5% is in line with

the Government’s stated intention to reduce the financial burden of parents. Impacted manufacturers should update their systems

and processes to reflect this adjusted rate to ensure the correct rate of sales tax is applied.

Indirect Tax Chat – January 2020

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Sales Tax Key Changes

Sales Tax (Amendments) Regulations 2019

Amendments made to the Sales Tax Regulations 2018:

Part I – Amendment of Regulation 2 The following definition of “courier service” has been added:

“courier service” has the meaning assigned to it under

regulation 2, Postal Services (Licensing) Regulations 2015. Part V & VI - Amendment of Regulation 10 & 12

Sales tax return and any cheque/bank draft for payment of

sales tax can now be furnished to the Customs Processing Centre via courier services; and

The return and cheque/bank draft shall be deemed to be furnished/have been received on the date the tracking number

of the delivery is recorded in the courier services company’s system.

Effective date: 1 January 2020

Deloitte’s comments Sales tax registrants who prefer manual submissions and

payments can now opt to use courier services. Delivery records from the courier company must be kept as evidence of the

submission and payment.

Part VII – Amendment of Regulation 16A & 16D Sales tax deduction by any registered manufacturer is now

allowed, in respect of taxable goods purchased by him which are raw materials, components, or packing and packaging

materials used solely in the manufacturing of his taxable goods.

Application for the deduction of sales tax shall be made to the

Director General of Customs.

The Director General of Customs may refuse any application for sales tax deduction.

Effective date: 1 January 2020

Deloitte’s comments The shifting of responsibility from the Minister of Finance to the

Director of General of Customs to approve/reject any sales tax deduction application is appropriate, as it will make the process

more efficient.

Indirect Tax Chat – January 2020

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Sales Tax Key Changes

However, to make the process fairer, an appeal to the Minister of

Finance on any rejection by the Director of General of Customs should be allowed, provided there are reasonable grounds of appeal.

Part VIII – Amendment of Regulation 17

The conditions for sales tax drawback claims have been

amended/added as follows:

The period for taxable goods to be exported has been reduced

from within six months to within three months, or any period as may be approved by the Director General;

Sales tax has been paid before the goods are exported.

A written notice stating the intention to claim for sales tax drawback has been given to a senior officer of sales tax at or before the time of export according to the manner determined

by the Director General.

The application for drawback of sales tax paid in respect of any one consignment of exported taxable goods shall be at least RM 200 and above.

For exported taxable goods which are subject to sales tax,

import duty and excise duty and the application of drawback is made on all such tax and duties, any amount of sales tax may be claimed.

The amount of drawback allowed will be calculated based on

the rate of sales tax levied upon import or purchased, or at the rate of sales tax levied or chargeable on goods of a like description at the time of export of the taxable goods,

whichever is the lower.

The above amendments to Regulation 17 shall not be applicable

to:

a) any taxable goods which are imported or purchased before 1 January 2020; and

b) any sales tax which has been paid on the taxable goods

exported before 1 January 2020.

Effective date: 1 January 2020

Indirect Tax Chat – January 2020

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Sales Tax Key Changes

Deloitte’s comments

Applicants for drawback should take note of new conditions, in particular, the three-month timeframe for goods to be exported and sales tax to be paid. In respect of the written notice to be

given, we understand that RMCD will provide guidelines on whether a one-off notification or individual notification would be

required before each export.

Sales Tax (Imposition of Sales Tax in respect of Designated Areas)

(Amendment) (No. 2) Order 2019

Imposition of Sales Tax – Amendment of Paragraph 2

Importation of motor vehicles into Pangkor and petroleum into the

designated area (DA) are now subject to sales tax.

Effective date: 1 January 2020

Deloitte’s comments

Though Pangkor has become a DA, importation of motor vehicles and petroleum into Pangkor will still be subject to sales tax.

Sales Tax (Compounding

of Offences) (Amendment) Regulations 2019

Method of Compounding - Amendment of Regulation 4

The Director General of Customs may grant an offer to

compound an offence beyond a period of fourteen days.

If full payment of the sum offered is made on or before the

expiry of fourteen days or DG approved extended time, no further proceedings shall be taken against the offender. Otherwise, prosecution may be instituted without further

notice.

Payment of Compound - Amendment of Regulation 5

The compound can no longer be paid via banker’s cheque or

electronic banking.

The only allowed payment method is via bank draft made payable to the Director General of Customs.

Effective date: 1 January 2020

Deloitte’s comments

The extended period would give more time to the businesses to manage the compoundable offences under the sales tax legislation.

Indirect Tax Chat – January 2020

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Sales Tax Key Changes

Sales Tax (Customs Ruling) (Amendment)

Regulations 2019

Amendment to Sales Tax (Customs Ruling) Regulations 2018

The following Customs Ruling forms have been updated:

First Schedule – Application form for Customs Ruling

Second Schedule – Customs Ruling

Third Schedule – Application form for renewal of Customs

Ruling

Effective Date: 1 January 2020 Deloitte’s comments

Applicants/businesses must ensure that the latest version of the

relevant application forms are being used in making any ruling applications.

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Susie Tan Associate Director JB Office

Wong Shi Yin Senior

JB Office

Indirect Tax Chat – January 2020

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2. Amendments to Service Tax legislation

Following the gazettal of multiple indirect tax legislations at the end of 2019, we have discussed

the Service Tax (Amendment) (No. 2) Regulations 2019 and Service Tax (Persons Exempted From Payment of Tax) (Amendment) Order 2019 in our indirect tax alert which you may find

here. We have covered the remaining service tax legislations below. All service tax amendments covered in our write up below came into effect on 1 January 2020.

Key Changes Description

Appointment of Date of Coming into Operation for Paragraphs 3(a) and

3(d) of the Service Tax (Amendment) Act 2019

Inclusion of Pangkor in the definition of Designated Areas effective 1 January 2020

Pangkor is effectively a designated area from 1 January 2020.

Pangkor means Pangkor Island, Mentagor Island, Giam Island, Simpan Island, Tukun Terindak Island, Pelanduk Island, Anak Pelanduk Island, Landak Island, Batu Orang Tua, and Batu

Jambal.

Deloitte’s comments

With Pangkor declared a designated area effective 1 January 2020, businesses with dealings in Pangkor should take note of the treatment of service tax in providing services to/acquiring services

from/within Pangkor for transactions from 1 January 2020, as well as any transactions that span across the transitional period.

Regulation 7 of the

Service Tax (Digital Services) Regulations 2019 via the Service Tax

(Digital Services) (Amendment)

Regulations 2019

Method of furnishing of returns

The method of furnishing the digital services return (form DST-02) has been expanded to include the use of ‘electronic means’ as the

Director General may determine (besides being limited to only electronic service) and the return shall also be deemed to be

furnished when received by the Director General though either of these methods.

Deloitte’s comments

The expansion of the method to submit returns is to facilitate/ease the submission of the DST-02 returns made by registered foreign service providers.

The Schedule in the

Service Tax (Digital Services) Regulations

2019 via the Service Tax (Digital Services) (Amendment)

Regulations 2019

Amendments to prescribed forms for digital services

For the DST-01 registration form, the changes are:

a) Brand Name has been added under Particular 3 besides

Trading Name; and

b) Particular 6 of “fax number” is now replaced with “website”.

Indirect Tax Chat – January 2020

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Key Changes Description

For the DST-02 return form, the changes are:

a) Particular 10 of “penalty rate and amount” is now replaced

with “total amount of service tax”;

b) Particular 11 of “total amount of service tax payable” is

replaced with “total amount of penalty (if any)”; and

c) Particular 12 of “currency” is now replaced with “total

amount payable”.

Deloitte’s comments While the registration form has now been amended to include the

foreign service provider’s website, the official online application on RMCD’s website has not been amended to incorporate this change

as at the date of this newsletter. Registered foreign service providers would have to take into account the new DST-02 return for their first filing (due in April 2020).

Item 3 of the Schedule

under the Service Tax (Imposition Of Tax For

Taxable Service In Respect Of Designated Areas And Special Areas)

Order 2018 via the Service Tax (Imposition

Of Tax For Taxable Service In Respect Of Designated Areas And

Special Areas) (Amendment) (No. 2)

Order 2019

Exclusions for Accommodation Premises

The provision of accommodation premises operated by an

employer as a facility to his employees in special areas is excluded as a taxable service.

Under taxable persons (i.e. column 2):

a) Along with the Federal Government, accommodation premises provided by State Governments are now also excluded; and

b) The condition of the exclusion in providing the

accommodation premise facility to ‘any person for educational, training or welfare purposes’ by the

governments, statutory bodies or local authorities, or private higher educational institutions, is now removed.

Deloitte’s comments

With the removal of the condition mentioned above, there seems to

be a blanket exclusion for the named bodies/institutions in

designated areas and special areas to not charge service tax when

providing accommodation premises to employees.

Indirect Tax Chat – January 2020

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Key Changes Description

Item 5 of the Schedule in Service Tax (Imposition

Of Tax For Taxable Service In Respect Of Designated Areas And

Special Areas) Order 2018 via the Service Tax

(Imposition Of Tax For Taxable Service In Respect Of Designated

Areas And Special Areas) (Amendment) (No. 2)

Order 2019

Acting as an agent

For clearing of goods from Customs control in special areas, persons who are given permission to act as an agent referred to under section 90 of the Customs Act 1967 has now been changed

to subsection 90 (2).

Deloitte’s comments The permission to act as an agent for the clearing of goods from

Customs control is to be given by a senior Customs officer subject to the terms and conditions imposed by the said person. This may

mean that additional terms and conditions from the ones that are already listed under section 90 may be enforced.

The three Schedules of

the Service Tax (Customs

Ruling) Regulations 2018

via the Service Tax

(Customs Ruling)

(Amendment)

Regulations 2019

Amendments to the Customs Ruling application form

The amended Customs Ruling application form has some changes made to its format and also contains new particulars, notably:

Company registration number in applicant identification;

For all rulings, whether there was a previous customs ruling;

For classification of goods only, detailed particulars of goods imported or manufactured is to be recorded in the form; and

For determination of manufacturing and taxable service or

taxable person, a note to attach detailed information in a

separate sheet when describing the manufacturing process or the particular service provided.

The form is now in both the National and English languages.

Amendments to the Customs Ruling document issued by RMCD

The old Customs Ruling document issued by RMCD is replaced with a similar bilingual document with the same particulars and this new

format is applicable to Customs Ruling for not only service tax, but also sales tax, customs duty and excise duty.

Updates to the Customs Ruling renewal application form

The Customs Ruling renewal application form is updated with a similar bilingual form with identical particulars.

One difference is in the second page of the application form,

where instead of asking to state whether there is a change of facts in the previous Customs ruling, the new renewal form asks

Indirect Tax Chat – January 2020

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Key Changes Description

to state any changes of description of goods/services in the current customs ruling (if any).

This new format is applicable to the Customs Ruling renewal

application form, not only for service tax but also sales tax,

customs duty, and excise duty.

Deloitte’s comments The standardised prescribed forms for Customs Ruling in respect of

indirect taxes is a welcome sight. Applicants who want to apply for Customs Rulings under different areas of indirect taxes may find it

easier to understand, as the forms have now been standardised under sales tax, service tax, customs duty, and excise duty and stated in both the national and English languages.

Brought to you by:

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Eliza Kamaruddin Manager KL Office

Patrick Ng Tax Assistant

KL Office

Indirect Tax Chat – January 2020

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3. New Service Tax policies

The RMCD published six service tax policies on 13 January 2020, which were to take effect from

1 January 2020 onwards. We understand that these service tax policies are intended to provide

further guidance in interpreting the recent amendments and/or outline specific administrative or

technical concessions. We have summarised the key points below with our commentary.

Service Tax Policy No 1/2020 – Expansion of the Scope of Taxable Service

a) Item (h) in Group G of the Service Tax Regulations (“STR”) 2018 includes all types of

information technology services as taxable service and has now been expanded to include distributing or reselling of information technology services on behalf of any person.

Deloitte’s comments

This change is in line with the Service Tax (Amendment) (No. 2) Regulations 2019. For more

information, kindly refer to our previous Indirect Tax Alert here.

b) The following services have been prescribed as new taxable services in the First Schedule of

the STR:

Group G

Item (l) – Provision of electronic medium that allows the suppliers to provide supplies to customers

Item (m) – Provision of digital services including transaction for provision of digital services on behalf of any person

Group I

Item 2 – provision of telecommunication service is expanded to include provision of

digital service Item 8 – provision of advertising service is expanded to include digital advertising

service

Deloitte’s comments

These changes are in line with the Service Tax (Amendment) (No. 2) Regulations 2019.

For more information, kindly refer to our previous Indirect Tax here.

c) Any new taxable person that provides the above new taxable services are required to:

determine the total value of taxable service using the historical method; and

apply for registration not later than 29 February 2020 if the total value of services from

December 2019 to January 2020 has exceeded RM500,000. The registration will take

effect from 1 March 2020 and the registered person shall start charging service tax from 1 March 2020 onwards.

Indirect Tax Chat – January 2020

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Any existing registered person who provides the above new taxable service shall:

make changes in his registration; and

start charging service tax from the date of the registration of the new taxable services.

Any exemption granted or any refund granted under subsection 34(3)(b) of the STA 2018

with regards to the new taxable service shall take effect from the date of registration.

Deloitte’s comments

The additional time given to new registrants to comply is a welcome move, but puts them at

an advantage over existing registrants. Furthermore, existing registrants have not been

given a clear deadline of when they should be making changes to their registration. This

would impact the date of application of service tax.

Service Tax Policy No 2/2020 – Service Tax Exemption on Imported Taxable Service

a) Any service tax registered person (i.e. account service tax via SST-02 form) who acquires imported taxable service (i.e. taxable services under Group G (excluding item (j) and item (k)) or advertising services Group I, First Schedule of the STR 2018) is granted service tax

exemption by the Minister if he fulfils the following conditions:

provides same service to customers as imported services acquired;

imported taxable service is for furtherance of business and not for personal use;

has paid the amount payable for the imported taxable service to the service provider;

and

it is not imported digital services acquired from foreign registered person.

The value of exempted imported taxable service is not required to be declared in SST-02

form.

Transitional rules:

Imported taxable services acquired on or after 1 January 2020, where invoices has been

received/payment has been made before 1 January 2020 (i.e. service tax becomes due and

payable)

If service tax has been accounted and paid in 2019 by registered person, claim for refund of service tax is not allowable.

Service tax is not required to be accounted for if the imported taxable services had not

been accounted and paid for.

Indirect Tax Chat – January 2020

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Imported taxable service acquired spanning before and after 1 January 2020

The proportion of the imported taxable service which is attributed to the part of the

period before 1 January 2020 is subject to service tax.

May determine the amount of tax due and payable on imported taxable service using pro-rate method, when the service tax becomes due and payable.

Imported taxable service acquired before 1 January 2020, where service tax becomes due

and payable after 1 January 2020

Service tax to be accounted for based on self-recipient accounting method in taxable period

to which tax is due.

Deloitte’s comments “Personal consumption” has not been defined. However, with the condition that the imported

taxable service is for “furtherance of business”, it could potentially mean where the service is

‘self-consumed’ i.e. used by the business, the exemption would not apply. This would likely

create uncertainty, similar to the RMCD practice (prior to this service tax policy) of not

allowing B2B exemption for services acquired by a recipient who is an ‘end-consumer’.

Another area of concern is with regards to the “same service” definition. In the event that

services are bundled in an onward sale, the policy is still unclear if the exemption would

apply.

Furthermore, in order to apply for the exemption, the registered person is required to pay

the amount payable for the imported taxable service to the service provider. In our view,

such a requirement is stringent as in most cases, payment on imported services would be

made according to the payment terms after an invoice is issued.

Service Tax Policy No 3/2020 – Service Tax Policy on Claiming a Refund by Offsetting

Method on Service Tax on Imported Digital Service Provided by Foreign Registered

Person

a) Any service tax registered person who has paid service tax to a foreign service provider on

imported digital services is allowed to claim a refund granted under section 34(3)(b) of the

STA 2018 by offsetting method based on the actual amount paid, if all the following conditions are fulfilled:-

provides the same digital service as the imported digital service;

imported digital service must be for the furtherance of business and not for personal consumptions;

the imported digital service must be provided by a foreign registered person (“FRP”);

and

payment of service tax has been made to FRP.

Indirect Tax Chat – January 2020

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Deloitte’s comments

Similar to our comments for Service Tax Policy No 2/2020 above, “personal consumption”

and “same digital service” have not been defined in this policy.

b) Service tax treatment for claiming a refund are as follows:

Where any payment made before 1 January 2020 in connection to receiving digital service

on or after 1 January 2020

No refund by offsetting method can be made or allowed as no service tax would be

imposed.

Where any payment is made after 1 January 2020 (invoice is issued before 1 January 2020)

in relation with the digital service acquired on or after 1 January 2020

FRP shall impose service tax by adjusting the invoice issued previously. Registered

person can claim for a refund by the offsetting method in the taxable period for which the service tax payment is made to a FRP.

Where any payment is made (invoice is issued on or after 1 January 2020) in connection

with receiving digital services on or after 1 January 2020

FRP to charge service tax on the digital services provided on or after 1 January 2020.

Registered person can claim for a refund by the offsetting method in the taxable period for which the service tax payment is made to a FRP.

Where any digital service received before 1 January 2020 and is spanning after 1 January

2020

FRP to charge service tax on the digital services provided on or after 1 January 2020. Registered person can claim for a refund by the offsetting method in the taxable period for which the service tax payment is made to a FRP.

The mechanism of claiming the refund by the offsetting method is to be made using the

SST-02 form under item 13(c) based on the actual amount of service tax paid to FRP.

Deloitte’s comments

It is stated in the policy that the mechanism of claiming the refund by the offsetting method

is to be made using the SST-02 form under item 13(c) based on the actual amount of

service tax paid to FRP.

However, we understand that the current system (MySST portal) has a limitation where it

does not allow a refund amount to be inserted, if the refund amount exceeds the total

amount payable.

Indirect Tax Chat – January 2020

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Service Tax Policy No 4/2020 – Service Tax on Online Distance Learning Services

a) The Minister of Finance has prescribed online distance learning service (i.e. digital service) provided by both local and foreign service providers as below is not subject to service tax:

Local service provider

Preschool education under the Education Act 1996;

Primary and secondary education under the Education Act 1996; or

Tertiary education including vocational education and professional trainings accredited by

Malaysian Qualifications Agency (MQA) or under the National Skills Development Act

2006.

Foreign service provider

Preschool education;

Primary and secondary education; or

Tertiary education, including vocational education and professional trainings

which are all recognised by the relevant authority in such country.

Deloitte’s comments

The concession now ensures parity between foreign service providers of online education and domestic service providers. It is a welcome move and reduces the cost burden for students and families. Service providers should ensure that the conditions are met, in

particular the requirement to demonstrate the recognition by an appropriate authority in their home country.

Service Tax Policy No 5/2020 – Service Tax on Online Newspaper, Online Journals and Periodicals

a) The Minister of Finance (“MoF”) has prescribed online newspapers, online journals and

periodicals (i.e. digital service) below, provided by both local and foreign service providers are not subject to service tax:

E-newspaper including printed digital version of newspaper under the tariff code of 4902.10

and 4902.90

E-newspaper refers to publications of matters at the regular interval, each issue being

dated and also frequently being numbered mainly of the current news of general interest, together usually with literary articles on subjects of current, historical, biographical, etc.

It generally provides space for illustrations and advertisements.

Indirect Tax Chat – January 2020

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Online educational, technical, scientific, historical or cultural journals and the periodicals

including printed digital version of journals and periodicals under the tariff code 4902.90.10

00 and other publication under the tariff code 4902.90.90 00

Online journals and periodicals refer to publications issued weekly, fortnightly, monthly, quarterly or half-yearly.

Adjustment of service tax being exempted are as follows:

Local service provider

Where the service tax has been accounted for (on payment basis) on the taxable service to be available on or after 1 January 2020, a registered person has to make adjustments

by issuing a credit note; or

If the service is provided for a period prior to 1 January 2020 and continuously after 1

January 2020, the registered person has to account and pay service tax on the service provided before 1 January 2020.

Local recipient of the imported service

If invoice has been received/payment has been made before 1 January 2020 on taxable

service to be available on or after 1 January 2020 and tax due and payable has been accounted before 1 January 2020, no refund can be claimed.

Where imported taxable service acquired spanning before and after 1 January 2020, the

registered person is required to account and pay service tax on imported service for the

period before 1 January 2020.

Claiming of service tax refund is not allowed for any person who has paid service tax.

Deloitte’s comments

Another welcome move that would reduce the cost to the public of consuming such types of online content.

Service Tax Policy No 6/2020 – Service Tax Treatment on Provision of Training and Coaching Services for Disabled Person

a) The provision of training services and coaching services provided to a person who holds a valid Kad OKU issued under the Persons with Disabilities Act 2008 [Act 685] are not subject

to service tax provided that the service provider is a training and teaching centres:

registered with the Ministry of Health;

registered with the Social Welfare Department; or

recognised by any national association.

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The service providers specified above are liable to register for service tax if the value for his

taxable services exceeds the threshold value of RM 500,000.

Deloitte’s comments

These changes are in line with the Budget 2020 announcements and will reduce the service

tax burden of disabled persons.

However there will still be compliance requirements for the training or coaching service

providers, such as declaring the exempted value of taxable service in their service tax

returns to be filed with RMCD.

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Leong Wan Chi Manager KL Office

Jaypradha Pram Kumar Tax Assistant

KL Office

Indirect Tax Chat – January 2020

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Contact us – Our Indirect Tax Team

Tan Eng Yew

Senthuran Elalingam

Indirect Tax Leader

etan@deloitte.com

Global Indirect Tax Clients & Industries

Leader +603 7610 8870 selalingam@deloitte.com

+603 7610 8879

Wong Poh Geng

Chandran TS Ramasamy

Director Director powong@deloitte.com ctsramasamy@deloitte.com

+603 7610 8834 +603 7610 8873

Larry James Sta Maria

Irene Lee Director Associate Director

lstamaria@deloitte.com irlee@deloitte.com +603 7610 8636 +603 7610 8825

Nicholas Lee

Wendy Chin

Associate Director Senior Manager nichlee@deloitte.com wechin@deloitte.com

+603 7610 8361 +603 7610 8163

Indirect Tax Chat – January 2020

23

Name Email address Telephone

Leong Wan Chi

Manager wanleong@deloitte.com +603 7610 8549

Eliza Azreen Kamaruddin Manager

eazreen@deloitte.com +603 7610 7271

Atika Hartini Suharto Manager

asuharto@deloitte.com +603 7610 7986

Tamil Selvan Chandran Manager

tchandran@deloitte.com +603 7610 9231

Emeline Tong

Assistant Manager emtong@deloitte.com +603 7610 8733

Naresh Srinivasan

Assistant Manager narsrinivasan@deloitte.com +603 7650 6459

Other offices

Name Email address Telephone

Susie Tan Johor Bahru and Melaka

susietan@deloitte.com +607 268 0851

Ng Lan Kheng

Penang lkng@deloitte.com +604 218 9268

Lam Weng Keat

Ipoh welam@deloitte.com +605 253 4828

Philip Lim

Kuching and Kota Kinabalu suslim@deloitte.com +608 246 3311

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Indirect Tax Chat – January 2020

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Indirect Tax Chat – January 2020

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