Sunday, October 30, 2011

Malaysia sales tax / service tax

Service tax and sales tax are currently the two major types of
consumption taxes imposed on certain prescribed goods and services.

The rate of Sales Tax: 5%-10%
The rate of Service tax: 5%.

The Malaysian government has intended to widen the scope of indirect
taxes by proposing to introduce Goods and Services Tax (GST). However,
this move has been put on hold indefinitely.


Service tax is a single stage tax applicable to certain prescribed
goods and services in Malaysia. The tax also applies to professional
and consultancy services as prescribed by the Malaysian customs
authorities. The rate of service tax currently is fixed at 5% of the
price, charge, or premium of the taxable goods or services prescribed.

Professional services provided by a company to companies within the
same group will be exempted from service tax, subject to terms and

Generally, the imposition of service tax is subject to a specific
threshold based on an annual turnover ranging from RM150,000 to
RM500,000, subject to the types of taxable services and taxable
person. The threshold would not apply for certain prescribed
professional and consultancy services.

It is proposed that with effect from 1 January 2010, service tax be
imposed on credit cards and charge cards including those issued free
of charge as follows:
- RM50 per year on the principal card
- RM25 per year on the supplementary cards.


Sales tax is a single stage tax imposed on taxable goods manufactured
locally and/or imported. "Taxable goods" means goods of a class or
kind not for the time being exempted from sales tax. Generally, all
exports are exempted from sales tax.

Manufacturers of taxable goods are required to register with the
custom authorities and to levy, charge and collect the tax from their
customers. For imported goods, sales tax is collected from the
importer upon the release of taxable goods from customs control.

Sales tax is an ad valorem and can be computed based on the value of taxable
goods sold, used, disposed of, or imported.

Sales tax is imposed on certain imported and locally manufactured
goods under the Sales Tax Act 1972. The tax rate ranges from 5 - 10%
for majority of the goods except for food preparations other than
alcoholic and non-alcoholic compound preparations (other than those of
heading No. 33.02) used for making beverages. Sales tax is also
imposed on petroleum and petroleum products according to specific

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