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Amendment Act · As enacted

Service Tax (Amendment) Act 2019

Amends the Service Tax Act 2018

Official textFrom Laws of Malaysia Online, unchanged

s 1Short title and commencement

(1)

This Act may be cited as the Service Tax (Amendment)

Act 2019.

(2)

This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette and the Minister may appoint different dates for the coming into operation of different provisions or Parts of this Act.

(3)

Notwithstanding subsection (2), the Minister may, by notification in the Gazette, appoint the effective date for the charging and levying of service tax on digital services under this Act.

s 2New section 1a

The Service Tax Act 2018 [Act 807], which is referred to as the “principal Act” in this Act, is amended by inserting after section 1 the following section:

“Territorial and extra-territorial application 1a. (1) This Act and its subsidiary legislation shall apply both within and outside Malaysia.

(2)

Notwithstanding subsection (1), this Act and its subsidiary legislation shall apply to any person of whatever nationality or citizenship, beyond the geographical limits of Malaysia and the territorial waters of Malaysia, if the person—

(a)

is a foreign service provider; or

(b)

is registered under section 56c as a foreign registered person.”.

s 3Amendment of section 2

Subsection 2(1) of the principal Act is amended—

(a)

in the definition of “designated areas”, by substituting for the words “and Tioman” the words “, Tioman and

Pangkor’;

(b)

in the definition of “special areas”, by substituting for the words “and the Joint Development Area” the words “the

Joint Development Area, and a petroleum supply base licensed under section 77b of the Customs Act 1967”;

(c)

by inserting after the definition of “registered person”

the following definition:

‘ “foreign registered person” means any foreign service provider who is registered under section 56c;’;

Service Tax (Amendment)

(d)

by inserting after the definition of “taxable person” the following definition:

‘ “Pangkor” means the Pangkor Island, Mentagor

Island, Giam Island, Simpan Island, Tukun Terindak

Island, Pelanduk Island, Anak Pelanduk Island, Landak

Island, Batu Orang Tua and Batu Jambal;’;

(e)

by inserting after the definition of “senior officer of service tax” the following definitions:

‘ “foreign service provider” means any person who is outside Malaysia providing any digital service to a consumer and includes any person who is outside

Malaysia operating an online platform for buying and selling goods or providing services (whether or not such person provides any digital service) and who makes transactions for provision of digital services on behalf of any person;

“consumer” means any person who fulfils any two of the following:

(a)

makes payment for digital services using credit or debit facility provided by any financial institution or company in Malaysia;

(b)

acquires digital services using an internet protocol address registered in Malaysia or an international mobile phone country code assigned to Malaysia;

(c)

resides in Malaysia;’; and

(f)

by inserting after the definition of “imported taxable service” the following definition:

‘ “digital service” means any service that is delivered or subscribed over the internet or other electronic network and which cannot be obtained without the use of information technology and where the delivery of the service is essentially automated;”.

s 4Amendment of section 9

Section 9 of the principal Act is amended by inserting after subsection (1) the following subsection:

“(1a) Notwithstanding paragraphs (1)(a) and (b), where a taxable service is provided by a taxable person and payment for such service is made to any machine or device operated by coins, tokens or the like, the value of such taxable service shall be as prescribed.”.

s 5Amendment of section 10

Subsection 10(1) of the principal Act is amended by deleting the word “provided”.

s 6Amendment of section 11

Section 11 of the principal Act is amended—

(a)

by inserting after subsection (1) the following subsection:

“(1a) The Director General may, upon application in writing by any registered person and subject to such conditions as he deems fit, approve the service tax in respect of the taxable service provided by the registered person to be due at the time the invoice is issued.”;

(b)

in subsection (2), by substituting for the words “of the invoice for the taxable service provided,” the words “the taxable service was provided, the”;

(c)

by inserting after paragraph (3)(a) the following paragraph:

“(aa) where any taxable service is provided by any registered person and payment for such taxable service is made to any machine or device operated by coins, tokens or the like, the service tax required to be accounted shall be due on the day when the coins, tokens or the like are collected from such machine or device;”; and

Service Tax (Amendment)

(d)

by inserting after subsection (4) the following subsection:

“(5) Paragraph (3)(c) shall not apply to a service which is prescribed as a taxable service after 1 September 2018.”.

s 7Amendment of section 12

Section 12 of the principal Act is amended by inserting after subsection (4) the following subsection:

“(5) This section shall not apply to a foreign service provider.”.

s 8Amendment of section 13

Section 13 of the principal Act is amended by inserting after subsection (5) the following subsection:

“(6) This section shall not apply to a foreign service provider.”.

s 9Amendment of section 14

Section 14 of the principal Act is amended by inserting after subsection (2) the following subsection:

“(3) This section shall not apply to a foreign service provider.”.

s 10Amendment of section 15

Section 15 of the principal Act is amended by inserting after subsection (11) the following subsection:

“(12) This section shall not apply to a foreign service provider.”.

s 11Amendment of section 16

Section 16 of the principal Act is amended by inserting after subsection (10) the following subsection:

“(11) This section shall not apply to a foreign registered person.”.

s 12Amendment of section 17

Section 17 of the principal Act is amended by inserting after subsection (6) the following subsection:

“(7) This section shall not apply to a foreign registered person.”.

s 13Amendment of section 18

Section 18 of the principal Act is amended by inserting after subsection (2) the following subsection:

“(3) This section shall not apply to a foreign registered person.”.

s 14Amendment of section 19

Section 19 of the principal Act is amended by inserting after subsection (2) the following subsection:

“(3) This section shall not apply to a foreign registered person.”.

s 15Amendment of section 20

Section 20 of the principal Act is amended by inserting after subsection (4) the following subsection:

“(5) This section shall not apply to a foreign registered person.”.

Service Tax (Amendment)

s 16Amendment of section 21

Section 21 of the principal Act is amended—

(a)

in subsection (1), by inserting after the word “shall”

the words “, within one year from the date the taxable service was provided or such extended period as may be approved by the Director General,”;

(b)

by inserting after subsection (1) the following subsection:

“(1a) Notwithstanding subsection (1), the Director

General may, upon request in writing by a registered person and subject to such conditions as he deems fit, approve an invoice to not be issued if the Director

General is satisfied that it will not be appropriate for the registered person to issue an invoice.”;

(c)

by inserting after subsection (3) the following subsection:

“(3a) Notwithstanding subsection (3), where the payment for taxable services are made to any machine or device operated by coins, tokens or the like, the amount of payment shall include the amount of service tax chargeable.”; and

(d)

by inserting after subsection (4) the following subsection:

“(5) This section shall not apply to a foreign registered person.”.

s 17Amendment of section 22

Section 22 of the principal Act is amended—

(a)

by renumbering the existing provision as subsection (1);

and

(b)

by inserting after subsection (1) as renumbered the following subsection:

“(2) This section shall not apply to a foreign registered person.”.

s 18Amendment of section 23

Section 23 of the principal Act is amended—

(a)

by renumbering the existing provision as subsection (1);

and

(b)

by inserting after subsection (1) as renumbered the following subsection:

“(2) This section shall not apply to a foreign registered person.”.

s 19Amendment of section 24

Section 24 of the principal Act is amended by inserting after subsection (6) the following subsection:

“(7) This section shall not apply to a foreign registered person.”.

s 20Amendment of section 25

Section 25 of the principal Act is amended by inserting after subsection (4) the following subsection:

“(5) This section shall not apply to a foreign registered person.”.

s 21Amendment of section 26

Section 26 of the principal Act is amended—

(a)

by renumbering the existing subsection (7) as subsection (8);

(b)

by renumbering the existing subsection (8) as subsection (7);

Service Tax (Amendment)

(c)

in subsection (9)—

(i)

by substituting for the words “subsection (7)” the words “subsection (8)”; and

(ii)

by substituting for the words “paragraph (8)(c)”

the words “paragraph (7)(c)”;

(d)

in subsection (10)—

(i)

by substituting for the words “The court” the words “In addition to any fine imposed by the court under subsection (8), the court”;

(ii)

by substituting for the words “subsection (7)” the words “subsection (8)”; and

(iii)

by substituting for the words “subsection (8)” the words “subsection (7)”;

(e)

in subsection (11)—

(i)

by substituting for the words “subsection (7)” the words “subsection (8)”; and

(ii)

by substituting for the words “subsection (8)” the words “subsection (7)” wherever appearing; and

(f)

by inserting after subsection (11) the following subsection:

“(12) This section shall not apply to a foreign registered person.”.

s 22Amendment of section 26a

Section 26a of the principal Act is amended—

(a)

by renumbering the existing subsection (3) as subsection (4);

(b)

by renumbering the existing subsection (4) as subsection (3);

(c)

in subsection (3) as renumbered, by deleting the word

“taxable”;

(d)

in subsection (5)—

(i)

by substituting for the words “subsection (3)” the words “subsection (4)”; and

(ii)

by substituting for the words “paragraph (4)(c)”

the words “paragraph (3)(c)”;

(e)

in subsection (6)—

(i)

by substituting for the words “The court” the words “In addition to any fine imposed by the court under subsection (4), the court”;

(ii)

by substituting for the words “subsection (3)” the words “subsection (4)”; and

(iii)

by substituting for the words “subsection (4)” the words “subsection (3)”; and

(f)

in subsection (7)—

(i)

by substituting for the words “subsection (3)” the words “subsection (4)”; and

(ii)

by substituting for the words “subsection (4)” the words “subsection (3)” wherever appearing.

s 23Amendment of section 27

Section 27 of the principal Act is amended—

(a)

in subsection (1)—

(i)

in subparagraph (a)(iii), by deleting the word

“or” at the end of the subparagraph;

(ii)

by inserting after paragraph (a) the following paragraphs:

“(aa) any foreign service provider fails to apply for registration under section 56c;

Service Tax (Amendment)

(ab)

any foreign registered person—

(i)

fails to furnish a return under section 56h; or

(ii)

furnishes a return which appears to the Director General to be incomplete or incorrect; or”;

(iii)

by substituting for the words “or 26a(4)” the words “, 26a(4) or 56i(2)”; and

(iv)

by substituting for the words “by the taxable person or” the words “by the taxable person or foreign registered person or the”; and

(b)

in paragraph (5)(b), by inserting after the words “a taxable person” the words “or foreign registered person”.

s 24New section 27a

The principal Act is amended by inserting after section 27

the following section:

“Offsetting unpaid tax against refund 27a. Notwithstanding any provision of this Act, where any person has failed to pay, in whole or in part—

(a)

any amount of service tax due and payable, any surcharge accruing, or any penalty, fee or other money payable under this Act;

(b)

any amount of service tax due and payable, any surcharge accruing, or any penalty or other money payable under the Service Tax Act 1975

[Act 151];

(c)

any amount of sales tax due and payable, any surcharge accruing, or any penalty or other money payable under the Sales Tax Act 1972 [Act 64];

(d)

any amount of sales tax due and payable, any surcharge accruing, or any penalty, fee or other money payable under the Sales Tax Act 2018 [Act 806];

(e)

any amount of goods and services tax due and payable, any surcharge accruing, or any penalty or other money payable under the Goods and Services

Tax 2014 [Act 762];

(f)

any amount of customs duty, or any surcharge accruing, or any penalty, fee or other money payable under the Customs Act 1967; or

(g)

any amount of excise duty, or any surcharge accruing, or any penalty, fee or other money payable under the Excise Act 1976 [Act 176], the Director General may offset, against the unpaid amount referred to in paragraph (a), (b), (c), (d), (e), (f) or (g), any amount or any part of any amount refundable under this

Act to that person and the Director General shall treat the amount offset as payment or part payment received from that person.”.

s 25Amendment of section 28

Section 28 of the principal Act is amended—

(a)

in subsection (2), by inserting after the words “taxable service” the words “or digital service” wherever appearing;

and

(b)

in subsection (3)—

(i)

in paragraph (a), by substituting for the words

“or 22” the words “, 22 or 56g”;

(ii)

in paragraph (b), by inserting after the words

“taxable service” the words “or digital service”

wherever appearing; and

(iii)

in paragraph (c), by inserting after the words

“registered person” the words “or foreign registered person”.

Service Tax (Amendment)

s 26Amendment of section 29

Section 29 of the principal Act is amended—

(a)

in the shoulder note, by inserting after the words “taxable person” the words “or foreign registered person”; and

(b)

by inserting after the words “taxable person” the words

“or foreign registered person” wherever appearing.

s 27Amendment of section 31

Subsection 31(1) of the principal Act is amended—

(a)

in paragraph (a), by inserting after the words “26(4)” the words “or 26a(1)”; and

(b)

in paragraph (b), by inserting after the words “26(8)” the words “or 26a(4)”.

s 28Amendment of section 32

Section 32 of the principal Act is amended—

(a)

in subsection (2), by inserting after the words

“subsection 26(8)” the words “or 26a(4)”; and

(b)

by inserting after subsection (3) the following subsection:

“(4) This section shall not apply to a foreign registered person.”.

s 29Amendment of section 34

Section 34 of the principal Act is amended—

(a)

in subsection (1)—

(i)

by inserting after the words “taxable service” the words “or digital service”; and

(ii)

by inserting after the word “provided” the words

“or any imported taxable service acquired”;

(b)

in paragraph (3)(a)—

(i)

by inserting after the words “taxable service” the words “or digital service”; and

(ii)

by inserting after the word “provided” the words

“or any imported taxable service acquired”; and

(c)

in subsection (4)—

(i)

by inserting after the words “any taxable service”

the words “or a foreign registered person provides any digital service”;

(ii)

by inserting after the words “the registered person”

the words “or the foreign registered person”; and

(iii)

by substituting for the words “on such taxable service” the words “on such taxable service or digital service”.

s 30Amendment of section 35

Section 35 of the principal Act is amended by inserting after subsection (4) the following subsection:

“(5) This section shall not apply to a foreign registered person.”.

s 31Amendment of section 36

Section 36 of the principal Act is amended—

(a)

by renumbering the existing provision as subsection (1);

and

(b)

by inserting after subsection (1) as renumbered the following subsection:

“(2) This section shall not apply to a foreign registered person.”.

Service Tax (Amendment)

s 32Amendment of section 39

Section 39 of the principal Act is amended by inserting after subsection (2) the following subsection:

“(3) This section shall not apply to a foreign registered person.”.

s 33Amendment of section 40

Section 40 of the principal Act is amended by inserting after subsection (3) the following subsection:

“(4) This section shall not apply to a foreign registered person.”.

s 34New section 40a

Part VII of the principal Act is amended by inserting before section 41 the following section:

“Non-application of Part VII

s 40a

This Part shall not apply to a foreign registered person.”.

s 35New section 46a

Part VIII of the principal Act is amended by inserting before section 47 the following section:

“Non-application of Part VIII

s 46a

This Part shall not apply to a foreign registered person.”.

s 36New section 51a

Part IX of the principal Act is amended by inserting before section 52 the following section:

“Non-application of Part IX

s 51a

This Part shall not apply to a foreign registered person.”.

s 37New Part IXa

The principal Act is amended by inserting after Part IX the following part:

“Part IXa

DIGITAL SERVICES

Imposition of service tax on digital services 56a. (1) Notwithstanding any provision of this Act, service tax shall be charged and levied on any digital service provided by a foreign registered person to any consumer.

(2)

The value of digital services on which the service tax is payable shall be the value charged by the foreign registered person.

(3)

Service tax on digital services shall be charged and levied at the rate fixed in accordance with subsection 10(2)

by reference to the value charged by the foreign registered person.

(4)

The service tax charged on the digital service provided to the consumer shall be due at the time when the payment for the digital service is received by the foreign registered person.

(5)

Any foreign registered person who contravenes subsection (1) 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.

Liability to be registered 56b. (1) The Minister may prescribe the total value of digital services for the purpose of registration of a foreign service provider under this Part.

Service Tax (Amendment)

(2)

Any foreign service provider who provides any digital service to a consumer is liable to be registered at the following time, whichever is the earlier:

(a)

at the end of any month, where the total value of all digital services provided by him in that month and the eleven months immediately preceding that month has exceeded the total value of the digital service prescribed under subsection (1); or

(b)

at the end of any month, where there are reasonable grounds for believing that the total value of all digital services provided by him in that month and the eleven months immediately succeeding that month will exceed the total value of the digital service prescribed under subsection (1).

(3)

The total value of all digital services provided by a foreign service provider to a consumer in the month and the eleven months immediately preceding that month referred to in paragraph (2)(a) shall be disregarded if—

(a)

the registration of the foreign service provider was cancelled, otherwise than under subsection 56f(3), during that period; and

(b)

the Director General is satisfied that before the registration of the foreign service provider was cancelled, the foreign service provider had given all information required by the Director General in order to determine whether or not to cancel the registration.

Application for registration of foreign service provider 56c. (1) Any foreign service provider who is liable to be registered under subsection 56b(2) shall apply to the Director

General for registration in the prescribed form not later than the last day of the month following the month in which he is liable to be registered as referred in paragraph 56b(2)(a)

or (b).

(2)

Upon receipt of the application under subsection (1), the Director General may approve the registration from such date as he may determine and subject to such conditions as he deems fit.

(3)

The Director General shall register the foreign service provider under subsection (1) with effect from the first day of the month following the month in which the application under subsection (1) is made or from such earlier date as the Director General may determine but such date shall not be earlier than the date the foreign service provider becomes liable to be registered.

(4)

Any foreign service provider who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding thirty thousand ringgit or to imprisonment for a term not exceeding two years or to both.

Cessation of liability to be registered 56d. Any foreign registered person shall cease to be liable to be registered where—

(a)

the Director General is satisfied that he ceases to provide digital services; or

(b)

he has been registered under subsection 13(2) or (4).

Notification of cessation of liability 56e. (1) A foreign registered person who—

(a)

ceases to provide digital services; or

(b)

has been registered under section 13, shall notify the Director General in writing of that fact and the date of cessation within thirty days from the date of cessation.

Service Tax (Amendment)

(2)

Any foreign registered person who contravenes subsection (1) commits an offence and shall, on conviction, be liable to a fine not exceeding thirty thousand ringgit or to imprisonment for a term not exceeding two years or to both.

Cancellation of registration 56f. (1) Where a foreign registered person makes a notification under section 56e, the Director General may cancel the foreign registered person’s registration from the date the foreign registered person ceased to be liable to be registered under section 56d or from such later date as the Director

General may determine if Director General is satisfied that the foreign registered person can be deregistered.

(2)

Where there is no notification made under section 56e and the Director General is satisfied that a foreign registered person has ceased to be liable to be registered under section 56d, the Director General may cancel the registration of the foreign registered person from the date the foreign registered person ceased to be liable to be registered under section 56d or from such later date as the Director General may determine.

(3)

Where the Director General is satisfied that on the day on which a foreign service provider was registered, such foreign service provider was not liable to be registered under section 56c or has ceased to be liable to be registered under section 56d, the Director General may cancel the registration of such foreign service provider with effect from the date as determined by the Director General in the notification in writing to such foreign service provider.

Issuance of invoice 56g. (1) Every foreign registered person who provides any digital service shall issue an invoice or a document containing prescribed particulars to the consumer in respect of the transaction.

(2)

The invoice or document referred to in subsection (1)

may be issued electronically or in paper form.

(3)

Taxable period and accounting for service tax 56h. (1) The taxable period for a foreign registered person shall be a period of three months ending on the last day of any month of any calendar year.

(2)

A foreign registered person may apply in writing to the

Director General for a taxable period other than the period as determined under subsection (1).

(3)

The Director General may, upon receiving any application under subsection (2)—

(a)

allow the application and the taxable period shall be the period as applied for;

(b)

refuse the application and the taxable period shall remain as determined under subsection (1); or

(c)

vary the length of the taxable period.

(4)

A foreign registered 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.

(5)

Where a taxable period has been varied under paragraph (3)(c) and notwithstanding subsection (4), the return shall be furnished not later than the last day of the month following the end of the varied taxable period.

Service Tax (Amendment)

(6)

The return referred to in subsections (4) and (5) shall be furnished whether or not there is service tax to be paid.

(7)

Any foreign registered person who—

(a)

contravenes subsection (4) or (5); or

(b)

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.

Payment of service tax 56i. (1) Any foreign registered person shall, in respect of the taxable period, pay to the Director General the amount of service tax due and payable not later than the last day of the month following after the end of his taxable period to which the return relates.

(2)

Where any service tax due and payable is not paid wholly or partly by the foreign registered person after the last day on which it is due and payable under subsection (1)

and no prosecution is instituted, the foreign registered person shall pay—

(a)

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 remains unpaid;

(b)

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 remains unpaid; and

(c)

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 remains unpaid.

(3)

Any foreign registered person who fails to pay the

Director General the amount of service tax due and payable under subsection (1) 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.

(4)

Subject to subsection (6), prosecution for the offence under subsection (3) may be instituted after the expiry of the period specified in paragraph (2)(c).

(5)

In addition to any fine imposed by the court under subsection (3), the court may order that any foreign registered person who is convicted for the offence under subsection (3)

to pay the penalty as specified in subsection (2).

(6)

No prosecution for the offence under subsection (3)

shall be instituted against the foreign registered person who has paid the amount of service tax due and payable and the penalty specified under subsection (2) within the period specified in subsection (2).

Duty to keep records 56j. (1) Every foreign registered person shall keep complete and true records written up to date of all transactions which affect or may affect his liability to service tax, including the following records:

(a)

all records of provision of digital service by the foreign registered person including invoices and receipts; and

(b)

all other records as the Director General may determine.

(2)

Any record kept under this section shall be preserved for a period of seven years from the latest date to which the record relates.

(3)

Where the record is in an electronically readable form, the record shall be kept in such manner as to enable the record to be readily accessible and convertible in writing.

Service Tax (Amendment)

(4)

A copy of the record shall be admissible in evidence in any proceedings to the same extent as the record itself.

(5)

Any foreign registered person who contravenes subsection (1), (2) or (3) 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.

Service of notice, etc., on foreign registered person 56k. Every notice, direction or any other document required by this Act to be served on a foreign registered person may be served by electronic service under section 87.”.

s 38Amendment of section 65

Section 65 of the principal Act is amended—

(a)

in paragraph (b), by inserting after the word “return” the words “or declaration”; and

(b)

in paragraph (c), by inserting after the word “return” the words “, declaration”.

s 39Amendment of section 68

Section 68 of the principal Act is amended—

(a)

by inserting after paragraph (b) the following paragraph:

“(ba) any service acquired by any person in Malaysia from any person who is outside Malaysia is not liable to service tax chargeable under this

Act;”; and

(b)

by deleting the words “in the prosecution”.

Read on from s 40