The
Service Tax (Amendment) Regulations 2025 [P.U.(A) 172/2025] (“
Amendment Regulations”) which amends the Service Tax Regulations 2018 [P.U.(A) 214/2018] (“
Principal Regulations”) will come into operation on
1 July 2025.
The Amendment Regulations will, among others, expand the scope of financial services that will be subject to service tax. The amendments relating to financial services were effected by replacing the table in Group H of the First Schedule to the Principal Regulations with a new table set out in the Amendment Regulations.
To affected parties in understanding the service tax treatment of financial services provided by financial service providers, the Royal Malaysian Customs Department has issued the
Guide on Financial Services (“
Guide”). The Guide provides helpful guidance as it, among others:
As the Amendment Regulations expand the scope of taxable financial services to include factoring, financial leasing, trade financing, credit facilities and Shariah compliant financing business, companies that carry on any of these businesses but are not regulated by Bank Negara Malaysia should take steps to determine whether they meet the registration threshold value as a taxable person and henceforth be subject to the requirement to charge service tax on their customers.
Alert by Kok Chee Kheong (Consultant) of the Corporate Practice of Skrine.