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.
As a result, the Royal Malaysian Customs Department uploaded the revised Guide on Food & Beverages onto their MySST website on 26 June 2023. It aimed to ensure clarity and compliance with the regulatory changes.
Here’s what you need to know:
1. Scope Expansion:
- The provision or sale of certain items by food & beverage (F&B) operators is now subject to service tax. These include:
- cigarettes,
- tobacco products,
- smoking pipes (including pipe bowls),
- e-cigarettes,
- vape devices, and
- related liquids or gels (regardless of nicotine content).
2. Special Areas Treatment:
- F&B services provided in Special Areas have been subject to service tax since 6 September 2018.
3. Deposit for Reservation:
- FAQ no. 22 has been updated.
- Deposits made for reservation are now subject to service tax and become due when payment is received, not upon service provision as stated previously.
4. Convenience Store Purchases:
- FAQ no. 25 clarifies that F&B purchases from convenience stores at petrol stations are not subject to service tax, as convenience stores are not classified as taxable entities.
- Self-service F&B purchases are also exempt from service tax.
5. Packaging Charges:
- A new FAQ, no. 41, highlights that packaging charges incurred by customers for takeaway orders are subject to service tax.
- These charges are considered part of the service provided by the restaurant.
6. Plastic Bag Sales:
- A new FAQ, no. 42, specifies that the sale of plastic bags to facilitate customers in carrying their packed food from restaurants is not subject to service tax.
7. Restaurant Cigarette Sales:
- With effect from 15th May 2023, sales of cigarettes at restaurants registered for service tax are subject to service tax (FAQ no. 43).
8. Convenience Store Classification:
- FAQ no. 44 explains that a convenience store providing food or beverages and offering a designated area for customer consumption within the store is not considered a taxable entity.
- However, if the convenience store allocates a dedicated area for preparing and selling food or beverages, it falls under service tax regulations.
These updates are essential for F&B operators to ensure compliance with the latest service tax regulations. For more detailed information, please refer to the revised “Guide on Food & Beverages.”
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