Updated: Sep 28, 2022
In the exercise of the powers conferred by paragraph 91(2)(m) of the Service Tax Act 2018 [Act 807], the Minister, on August 12, 2022, gazetted the Service Tax (Digital Services) (Amendment) Regulations 2022 (P.U. (A) 260/2022).
The Service Tax (Digital Services) Regulations 2019 [P.U. (A) 269/2019] are amended.
Digital service provided to the group of companies
Where a company that is a foreign registered person provides any digital service to any company in Malaysia within the same group of companies with the foreign registered person, such digital service “is not considered as a digital service for the purposes of the Act".
Because of this revision, it is evident that the Act's provisions do not apply to intra-group services (i.e. to be treated as out-of-scope services).
Previously, the intra-group digital services were within the scope of service tax but were not taxable unless the digital service was also provided to any other person or company in Malaysia outside the group of companies.
Specifics required for a Credit Note or Debit Note
A foreign registered person providing any digital service shall issue a credit note or debit note where, after the return for the digital service has been furnished to the Director General, there is a reduction of, or addition to, the service tax amount which has been charged on the digital service—
due to a change in the rate of service tax in force under the section of the Act; or
due to any adjustment in the course of business.
Sub-regulation 6A(13) of the Service Tax (Digital Services) Regulations 2019 sets out the particulars to be included in a credit or debit note.
A foreign registered person may request in writing to the Director General of Customs and Excise (referred to hereafter as the "Director General") to omit any particulars specified in sub-regulation 6A(3) from a credit note or debit note. The Director General will then consider the request and decide whether or not to grant it. When giving such a request, the Director General is allowed to place whatever conditions he thinks are necessary or appropriate.
Payment Deadline for service tax or penalty
No penalty is to be imposed if a foreign registered person proves that the service tax is paid no later than (Previously: before) the aforesaid payment date.
The payment deadlines outlined in Section 56I of the Act and Subsection 9(3) of the Service Tax (Digital Services) Regulations 2019 have been brought into conformity with this amendment.
Return filing and payment are unaffected by a holiday
Regulation 16 of the Service Tax (Digital Services) Regulations 2019 is amended by inserting after sub-regulation (2) the following sub-regulation:
“(3) For the purposes of receiving returns and payments of service tax or penalty payable, where the last date specified in subsection 56H(4), 56H(4A) or 56I(1) of the Act falls on the Federal weekly holiday or Federal public holiday in Malaysia or in the country where the foreign registered person established, then the last day to receive such returns and payments of service tax or penalty payable is on the Federal weekly holiday or Federal public holiday in Malaysia or in the country where the foreign registered person established.”.
Sub-regulations 16(1) and 16(2) of the Service Tax (Digital Services) Regulations 2019 stipulate, among other things, that returns and payments under the Act must be received between 7.30 a.m. and 11.30 p.m. Malaysian standard time and that any return submitted or payment received outside of the specified time is deemed to have been submitted or received the next day.
There will be no extension of time for submitting a return or ensuring receipt of payment concerning digital services because the last day for performing its obligation falls on a weekly holiday or public holiday in Malaysia or the country where the foreign registered person is established. This is because the new sub-regulation 16(3) makes it clear that there will be no extension of time for submitting a return.
Service Tax (Digital Services) Regulations 2019
Service Tax (Digital Services) Amendment Regulations 2019
Service Tax (Digital Services) Amendment Regulations 2020
Service Tax (Digital Services) Amendment No2 Regulations 2020
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