“Section 26 Furnishing of Returns and Payment of Service Tax Due and Payable” is read as follows:-
26(1) [Furnishing of return]
Every taxable person shall, in respect of his taxable period, account for the service tax due in a return as may be prescribed and the return shall be furnished to the Director General in the prescribed manner not later than the last day of the month following the end of his taxable period to which the return relates.
26(2) [Furnishing of return with varied taxable period]
Where a taxable period has been varied under paragraph 25(3)(c) and notwithstanding subsection (1), the return shall be furnished within thirty days from the end of the varied taxable period.
26(3) [Furnishing of return for deregistered person]
A registered person who ceases to be liable to be registered under section 18 or ceases to carry on business of providing taxable services under section 19 shall, not later than thirty days after such cessation, or such later date as the Director General may allow, furnish a return containing particulars as the Director General may determine in respect of that part of the last taxable period during which the person was registered.
26(4) [Payment of tax due]
Any taxable person who is required to furnish a return under this section shall pay to the Director General the amount of service tax due and payable by him in respect of the taxable period to which the return relates not later than the last day on which he is required to furnish the return.
26(5) [Furnishing of return regardless of tax amount]
The return referred to in subsections (1), (2) and (3) shall be furnished whether or not there is service tax to be paid.
26(6) [Failure to furnish return]
Any taxable person who—
- contravenes subsection (1), (2) or (3); or
- furnishes an incorrect return, commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.
26(7) [Offence and penalty]
Where any service tax due and payable is not paid wholly or partly by any taxable person after the last day on which it is due and payable under subsection (4) and no prosecution is instituted, the taxable person shall pay—
- for the first thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (4), a penalty of ten percent of the amount of service tax which remains unpaid;
- for the second thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (4), an additional penalty of fifteen per cent of the amount of service tax which remains unpaid; and
- for the third thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (4), an additional penalty of fifteen per cent of the amount of service tax which remains unpaid.
26(8) [Failure to pay tax due]
Any taxable person who fails to pay to the Director General the amount of service tax due and payable under subsection (4) commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.
26(9) [Prosecution of offence]
Subject to subsection (11), prosecution for the offence under subsection (8) may be instituted after the expiry of the period specified in paragraph (7)(c).
26(10) [Power of Court]
In addition to any fine imposed by the court under subsection (8), the court may order that any taxable person who is convicted for the offence under subsection (8) to pay the penalty as specified in subsection (7)
26(11) [No prosecution when amount paid within specified period]
No prosecution for the offence under subsection (8) shall be instituted against any taxable person who has paid the amount of service tax due and payable, and the penalty specified under subsection (7) within the period specified in subsection (7).
26(12) [Exception to foreign registered person]
This section shall not apply to a foreign registered person.
“Section 26A – Furnishing of Declaration and Payment of Service Tax Due and Payable by Person other than Taxable Person” is read as follows:-
26A(1) [Furnishing of declaration]
Any person other than a taxable person who, in carrying on his business, acquires any imported taxable service shall—
- account for the service tax due in a declaration as may be prescribed and the declaration shall be furnished to the Director General; and
- pay to the Director General 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.
26A(2) [Offence relating to declaration]
Any person referred to in subsection (1) who–
- contravenes subparagraph (1)(a); or
- furnishes an incorrect declaration,
commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.
26A(3) [Offence and penalty]
Where any service tax due and payable is not paid wholly or partly by any person referred to in subsection (1) after the last day on which it is due and payable under subsection (1) and no prosecution is instituted, the person shall pay—
- for the first thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (1), a penalty of ten per cent of the amount of service tax which remains unpaid;
- for the second thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (1), an additional penalty of fifteen per cent of the amount of service tax which remains unpaid; and
- for the third thirty-day period that the service tax is not paid wholly or partly after the expiry of the period specified under subsection (1), an additional penalty of fifteen per cent of the amount of service tax which remains unpaid.
26A(4) [Failure to pay tax due]
Any person referred to in subsection (1) who fails to pay to the Director General the amount of service tax due and payable under paragraph (1)(b) commits an offence and shall, on conviction, be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding three years or to both.
26A(5) [Prosecution of offence]
Subject to subsection (7), prosecution for the offence under subsection (4) may be instituted after the expiry of the period specified in paragraph (3)(c).
26A(6) [Power of Court]
In addition to any fine imposed by the court under subsection (4), the court may order that the person referred to in subsection (1) who is convicted for the offence under subsection (4) to pay the penalty as specified in subsection (3).
26A(7) [No prosecution when amount paid within specified period]
No prosecution for the offence under subsection (4) shall be instituted against any person referred to in subsection (1) who has paid the amount of service tax due and payable, and the penalty specified under subsection (3) within the period specified in subsection (3).
Finance (No. 2) Bill 2023
The proposed amendments to Sections 26 and 26A of the Service Tax Act 2018, as outlined in the Finance (No. 2) Bill 2023, introduce significant changes to the processes of furnishing returns and declarations, as well as the payment of service tax by both taxable and non-taxable entities.
Section 26 governs the furnishing of returns and payment of service tax by taxable persons, emphasising a new requirement that these returns must be submitted “in the form and manner as determined by the Director General.”
This amendment grants the Director General the authority to define the specific format and method for submitting returns, fostering adaptability in the compliance process.
Concurrently, Section 26A deals with furnishing declarations and payment of service tax by persons other than taxable entities.
These amendments empower the Director General to determine the format and method for submitting declarations.
These amendments signal a shift towards a more dynamic and flexible approach in complying with service tax regulations, potentially impacting the efficiency and ease of compliance for both taxable and non-taxable entities.
