Some significant amendments to the Service Tax Regulations 2018 under the Service Tax (Amendment) Regulations 2023 [P.U. (A) 150/2023], which was gazetted on 12 May 2023.
These Regulations come into operation on 15 May 2023.
We would like to inform you that the RMCD released an updated service tax guide on accommodation services on 27 June 2023 (“Revised Accommodation Guide”).
The Revised Accommodation Guide supersedes the earlier guide dated 13 October 2020.
The salient points of the critical amendments to the revised guides, which will have implications for certain taxable services and individuals, are as follows:
- “Special Areas”: The Revised Accommodation Guide specifies that accommodation services in “special areas,” including free zones, licensed warehouses, licensed manufacturing warehouses, the Joint Development Area, or petroleum supply bases licensed under section 77B of the Customs Act 1967, are subject to service tax effective from September 6, 2018.
- However, accommodation services within “designated areas” such as Labuan, Langkawi, Pangkor, or Tioman remain exempt from service tax.
- Expanded Exemptions: Effective May 15, 2023, the scope of accommodation premises excluded from service tax has been expanded.
- This now includes accommodation premises provided by private educational institutions registered under the Education Act 1996 and those under the Private Higher Educational Institutions Act 1996.
- Taxable Services Expansion: Taxable services related to tobacco products and beverages have been expanded to include the provision or sale of items such as cigarettes, tobacco pipes, electronic cigarettes, and preparations used for smoking through electronic cigarettes and vaporisation devices, whether or not containing nicotine.
- Vending Machine Treatment: FAQ 23 has been updated to address the service tax treatment of vending machines on hotel premises. The updated answer specifies that transactions through machines owned by the hotel operator, selling beverages and certain tobacco-related products, are subject to service tax.
- Transactions through vending machines not owned by the hotel operator remain unaffected.
- Student Accommodation: FAQ 28 now clarifies that student accommodation in hostels provided by private colleges, private schools, or international schools registered under the Education Act 1996 or the Private Higher Educational Institutions Act 1996 is not subject to service tax.
These updates are crucial for businesses and individuals affected by service tax regulations. It is essential to stay informed and ensure compliance with these changes to avoid potential issues.
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