The Royal Malaysian Customs Department published the Guidelines on Electric Delivery and Distribution Services on 27 February 2024.
The guidelines provide an overview of the service tax treatment on electric delivery and distribution services under the Service Tax Act 2018.
Key Points:
- Effective 1 March 2024, the service tax rate on electric delivery and distribution services will be increased from 6% to 8%.
- Service tax applies to electricity usage exceeding 600kWh in a 28-day billing cycle period for domestic consumers.
- Electricity delivery and distribution services provided within Designated Areas (islands of Langkawi, Labuan, Tioman, Pangkor) are exempted from service tax.
- Service providers of electricity exceeding the annual threshold of RM500,000 are required to be registered under service tax.
FAQs:
- Q: What is the service tax treatment for electricity delivery and distribution services to domestic consumers? A: Service tax applies on electricity usage exceeding 600kWh in a 28 day billing cycle period for domestic consumers.
- Q: What is the applicable service tax rate for electricity delivery and distribution services effective 1 March 2024? A: The service tax rate is increased from 6% to 8%, effective 1 March 2024.
- Q: What is the service tax treatment if a condominium management body is charged electricity supply in bulk and issues separate bills to individual strata owners? A: If the management body is licensed to distribute electricity to domestic consumers, it has to be registered under service tax if annual sales exceed the threshold and charge service tax on usage exceeding 600kWh in a 28-day billing cycle.
- Q: Does service tax apply if electricity generated from solar panels installed in a company building is sold to Tenaga Nasional Berhad (the national energy utility company)? A: No, the sale of electricity to TNB is not subject to service tax as it is not distributed to residential consumers.
Conclusion:
The guidelines outline registered electricity service providers’ service tax obligations and responsibilities.
They need to charge service tax appropriately, issue tax invoices, submit tax returns and keep proper records. Further information is available from the Royal Malaysian Customs Department.
Reference:
