Expansion of Scope of Taxation Services and Increase of Service Tax Rate

Expansion of Scope of Taxable Services

Effective from March 1, 2024, the scope of taxable services in Malaysia will be expanded to include the following:
  1. Karaoke centre services;
  2. Delivery services (except for delivery of food and beverage);
  3. Brokerage and underwriting services for non-financial services such as brokerage for ship and aircraft space, commodity, and real estate; and
  4. Logistic services.

Businesses providing the aforementioned services with a 12-month revenue from taxable services exceeding RM500,000 are required to register for service tax with the Royal Malaysian Customs Department.

Increase of Service Tax Rate

In addition to the expansion of taxable services, there will be an increase in the service tax rate from 6% to 8%, effective March 1, 2024. However, this rate hike will not apply to the following services:

  1. Food and beverage;
  2. Telecommunication services;
  3. Vehicle parking space services; and
  4. Logistic services.
It is crucial for businesses engaged in taxable services to be aware of these changes and to adopt the new service tax rate from March 1, 2024, onwards. Compliance with these regulatory adjustments is essential to avoid penalties and ensure the smooth operation of your business.

13 Jan 2024