The Service Tax (Digital Services) Regulations 2019 [P.U.(A) 269/2019] (‘
Principal Regulations’) have been amended by the Service Tax (Digital Services) (Amendment) Regulations 2022 [P.U.(A) 260/2022] (‘
Amendment Regulations’) from 15 August 2022. The amendments are as follows:
| 1. |
Provision of digital services within the group |
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Subregulation 5A(1) of the Principal Regulations has been amended to state that digital service provided by a foreign service provider or a foreign registered person to a company in Malaysia within its same group “is not considered as a digital service” for the purposes of the Service Tax Act 2018 (‘the Act’). Previously, subregulation 5A(1) stated that “such digital service shall not be subject to service tax”. The amendment makes it clear that the provisions of the Act do not apply to these intra-group services. |
| 2. |
Particulars to be included in a credit note or debit note |
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Subregulation 6A(1) of the Principal Regulations provides for the issue of credit notes and debit notes in the circumstances specified in subregulation 6A(1). In particular, subregulation 6A(3) sets out the particulars to be included in a credit note or debit note.
A new subregulation 6A(3A) is inserted into the Principal Regulations that permits the Director General of Customs and Excise (‘Director General’) to allow a foreign registered person, upon the latter’s request in writing, to omit any particulars specified in subregulation 6A(3) from a credit note or debit note. The Director General may impose such conditions as he deems fit in allowing such request. |
| 3. |
Deadline for payment of service tax or penalty |
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Subregulation 9(3) of the Principal Regulations stipulates that no penalty is to be imposed if a foreign registered person proves that the service tax is paid before the date specified in section 56I of the Act, i.e. no later than the last day of the month following the end of the applicable taxable period.
The Amendment Regulations amend this provision to state that no penalty is to be imposed if a foreign registered person proves that the service tax is paid no later than the aforesaid payment date. This amendment reconciles the payment deadlines specified in section 56I of the Act and subregulation 9(3) of the Principal Regulations. |
| 4. |
Submission of return and payment not affected by public holiday |
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Subregulations 16(1) and 16(2) of the Principal Regulations provide, inter alia, that returns and payments under the Act are to be received between 7.30 a.m. to 11.30 p.m. Malaysian standard time and that any return submitted or payment received beyond the stipulated period is deemed to have been submitted or received on the next following day.
The Amendment Regulations introduce a new subregulation 16(3) which provides, inter alia, that there shall not be any extension of time for submitting a return or receiving a payment if the last day for submitting a return or receiving a payment falls on a Federal weekly holiday or Federal public holiday in Malaysia or in the country where the foreign registered person is established. In other words, a public or weekly holiday falling on the last date for submitting a return or receiving a payment does not extend the deadline for the foreign registered person to perform its obligation. This amendment also displaces the general rules for the computation of time set out in paragraphs (b) and (c) of subsection 54(1) of the Interpretation Acts 1948 and 1964, insofar as those provisions apply in relation to events in Malaysia. |
Comments
Foreign registered persons providing digital services should note that the new subregulation 6A(3) will enable them to submit requests to the Director General to omit specified particulars to be included in a credit note or a debit note. However, they should also note that the new subregulation 16(3) makes it clear that there will be no extension of time for submitting a return or ensuring receipt of a payment in relation to digital services by reason that 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.
Alert by Tan Wei Liang (Senior Associate) of the Corporate Practice of Skrine