1. Tax Exemption.
Exemption of Service Tax is only given by The Minister of Finance as under section 6, service tax Act 1975. Services listed below are free from Service Tax :
- Public Trustee Services.
- Provision or sale of food, drinks or tobacco products by Second and Third Class Public Houses and Second Class Beer House effective from 30 April 2001. However if the total annual sales turnover reached threshold RM 3K , provision of services as above is subjected to Service Tax.
- Provision of massage by Blind People (Disable person) registered under Malaysian Association of Blind (MAB)..
- Financial management involving selling/buying shares, warrants, bonds securities, unit trust and trustee funds.
- Internet Services.
- Complimentary Room for tourist guides.
2. Contra
System (Section 21A, Service Tax Act 1975).
A mechanism which permits a licensee to deduct from time to time from his tax return, the amount of service tax paid but subsequently refunded to his customer by reason of:
- Discounts subsequently given,
- Price reduced or adjusted,
- Transaction is cancelled
- insurance policies terminated before expiry date
- insurance premium is lowered due to shorter period of coverage or reduced coverage.
Use of contra system must be approved by The Director General of Customs.
3. Refund of service tax or penalty overpaid or erroneously paid (Sect. 21, ACP 1975). Application for refund must be made within one year of the payment of tax/penalty made.
4. Refund for bad debt (Sect. 21B, ACP 1975)
Any bad debt may be refunded if service tax has not been received from customer within 6 months from the day service tax has been paid provided that:
- Customer has been declared bankrupt ( under Bankruptcy Act 1967);
- Customer has been placed under liquidation;
- Winding-up order has been placed on customer by court or voluntary liquidation is applied for;
- Licensee has filed an application in court for debt owed;
- Licensee has applied for bankruptcy proceedings in court against customer for debt owed for taxable services provided;
- Application for refund of tax paid on bad debt may be made within a period of 6 years from the date tax was paid.
A Licensee who wishes to use such facilities must first get approval from The State Customs Director.
5. Remission of tax or penalty (Sect. 22, ACP 1975).
Licensee may apply for remission of tax or penalty by writing to Treasury or through Customs Headquarters/ Director of Customs.
6. Intragroup ( Regulations 3 and 4, Service Tax Regulations 1975 ).
Exemption is given to taxable services such as accounting, legal, engineering, architectural, surveying, consultancy and management services provided to companies under the same group, as prescribed under Group G, the Second Schedule, Service Tax Regulations 1975. (hyperlink).
7. Tax-inclusive [ Regulation 7(a) Second Schedule, Service Tax Regulations 1975) ]
Tax-inclusive facility is where sales value is tax inclusive. This is only accorded to the hotel industry, parking servoces and prepaid phone services. Licensees who wish to such facilities must get prior approval by writing to The Director General of Customs.
8. Disbursement allowed are out of pocket expenses incurred which are reimbursed by customers. incurred in order to provide taxable services. Such reimbursement would include:
- Transportation charges
- Postage
- Facsimile and telephone charges
- Payment made under the provision of other laws in force.
