19 November 2018 Dear Valued Client / Business Associate, 2018 Finance Bill Highlights On Monday, 19 November 2018, the Honorable Finance Minister, YB Tuan Lim Guan Eng, tabled the 2018 Finance Bill. We are pleased to set out below the salient points of the proposed changes in relation to SST:- Executive Director Service Tax on Imported Services Currently, Service Tax is not applicable on imported services. It is proposed that the imposition and scope of Service Tax be widened to include any imported taxable service. Definition Value of Imported Taxable Service imported taxable service means any taxable service acquired by any person in Malaysia from any person who is outside Malaysia. Shall be as prescribed by the Minister of Finance. Dato Tan Sim Kiat Advisor Indirect Tax Practice Time Service Tax is Due At the time when the payment is made or invoice is received for the service, whichever is the earlier.
Duty to Keep Records The duty to keep records include all records of imported taxable service, which shall also apply to any person other than a taxable person who, in carrying on his business, acquires any imported taxable service. Furnishing of Declaration and Payment of Service Tax Due and Payable Any person other than a taxable person who, in carrying on his business, acquires any imported taxable service shall (a) account for the Service Tax due in a declaration as may be prescribed and the declaration shall be furnished to the Director General ( DG ); and (b) pay to the DG the amount of Service Tax due and payable by him, not later than the last day of the month following the end of the month in which the payment on the service has been made by him or invoice is received by him. Offences Failure to furnish declaration by due date; or Furnishes an incorrect declaration, Power to Assess conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both. Failure to pay the Service Tax by the due date conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both. If no prosecution is instituted, the penalty is calculated based on the number of days late on the amount of Service Tax which remains unpaid i.e. First 30 days 10% penalty Second 30 days 15% penalty Third 30 days 15% penalty Prosecution for the offence may be instituted after the expiry of the third 30 days period. However, no prosecution shall be instituted against any person who has paid the amount of Service Tax due and payable, and the penalty within the stipulated period. Any person other than a taxable person who, in carrying on his business, acquires any imported taxable service (i) fails to furnish a declaration; or (ii) furnishes a declaration which appears to
the DG to be incomplete or incorrect, the DG may assess to the best of his judgment the amount of Service Tax due and payable, and the penalty payable as mentioned above, as the case may be, if any, and shall forthwith notify him of the assessment in writing. Sales Tax Deduction of Sales Tax It is proposed that a new provision (Section 41A) for deduction of Sales Tax be introduced. Power of Minister Scope Non- Compliance The Minister may make Regulations prescribing: (a) any amount of Sales Tax to be deducted in respect of taxable goods purchased by any registered manufacturer (b) any condition for the deduction; and (c) the form and manner of such deduction. The deduction of Sales Tax shall be made on taxable goods which are raw materials, components or packaging materials used solely in the manufacturing of taxable goods. Where any registered manufacturer who has made a deduction above fails to comply with any conditions to which the deduction relates, any Sales Tax that has been the subject of the deduction shall become due and payable by the registered manufacturer on the date on which any of the conditions failed to be complied with. Offences Any person who causes or attempts to cause the deduction of Sales Tax above for himself or for any other person of any amount in excess of the amount properly so deductible for him or for that other person conviction, be liable (a) to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both; and (b) to a penalty of two times the amount deducted in excess of the amount properly so deductible.
Sales Tax Other Proposal The Sales Tax value for manufacturers who receive taxable goods from any person to be manufactured and subsequently returned to such person, is expanded to include all manufacturers (instead of registered manufacturer) Consequently, the power of the DG to assess any tax due and payable, and penalty payable has been widened to cover any person rather than the existing taxable person. Should you have any questions or require further clarification, please do not hesitate to contact any of our above Tax Leaders or other Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organisation at the following telephone numbers for respective offices: Offices Telephone Number Petaling Jaya office +603 7721 3388 Penang office +604 238 2288 Ipoh office +605 253 1188 Johor Bahru office +607 266 2213 Kota Kinabalu office +6088 363 020 Kuching office +6082 268 308 Regards, Executive Director KPMG Tax Services Sdn Bhd For more information on our core service offerings, please contact: Petaling Jaya Office Tai Lai Kok Head of Tax and Head of Corporate Tax ltai1@kpmg.com.my + 603 7721 7020 Bob Kee Head of Transfer Pricing bkee@kpmg.com.my + 603 7721 7029 Long Yen Ping Head of Global Mobility Services yenpinglong@kpmg.com.my + 603 7721 7018 Head of Indirect Tax suelynnng@kpmg.com.my + 603 7721 7271
Soh Lian Seng Head of Tax Risk Management lsoh@kpmg.com.my + 603 7721 7019 Nicholas Crist nicholascrist@kpmg.com.my + 603 7721 7022 Dato Leanne Koh leannekoh@kpmg.com.my + 603 7721 7026 Neoh Beng Guan bneoh@kpmg.com.my + 603 7721 7025 Ong Guan Heng guanhengong@kpmg.com.my + 603 7721 7027 Chang Mei Seen Transfer Pricing meiseenchang@kpmg.com.my + 603 7721 7028 Ivan Goh Transfer Pricing ivangoh@kpmg.com.my + 603 7721 7012 Outstation Offices Evelyn Lee Penang Tax evewflee@kpmg.com.my +604 238 2288 (ext. 312) Regina Lau Kuching Tax reglau@kpmg.com.my +6082 268 308 (ext. 2188) Titus Tseu Kota Kinabalu Tax titustseu@kpmg.com.my +6088 363 020 (ext. 2822) Ng Fie Lih Johor Bahru Tax flng@kpmg.com.my +607 266 2213 (ext. 2514) Crystal Chuah Yoke Chin Tax Manager Ipoh Tax ycchuah@kpmg.com.my +605 253 1188 (ext. 320) kpmg.com/socialmedia Privacy Legal To unsubscribe, please click here. KPMG Malaysia app: 2018 KPMG Tax Services Sdn. Bhd., a company incorporated under Malaysian law and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative ( KPMG International ), a Swiss entity.