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Changes in the Transitional Rules for SST Rate Announced
SST for Taxable Services Provided to Customers
Effective from 1 March 2024, the Minister of Finance has set the service tax rate to be increased from 6% to 8% on all taxable services except for food and beverage services, telecommunication services, parking space provision services and logistics services. Meanwhile, credit card and charge card services remain at a specific rate of RM25/year.
Effective from 1 March 2024, the Minister of Finance has designated the following services as new taxable services:
- Karaoke center services under Group C at a rate of 8%;
- Maintenance or repair services under Group G (Item 13) at a rate of 8%;
- Brokerage and underwriting services for services other than financial under Group I (Item 12) at a rate of 8%; and
- Logistics services under Group J (New Details) at the rate of 6%.
The determination of the service tax rate for taxable services provided shall be based on the date the service is provided.
In the event that taxable services are provided in full before the effective date of the tax rate change (1 March 2024), taxable services are charged at the old rate 6%.
If the taxable service is fully provided on/after 1 March 2024, the taxable service is charged at the new rate 8%.
In the event that taxable services are provided before 1 March 2024 and beyond 1 March 2024, the service tax rate shall be apportioned as follows:
a) taxable services provided before 1 March 2024 are subject to service tax at the old rate; and
b) taxable services provided on/after 1 March 2024 are subject to service tax at the new rate.
However, regardless of the registered person’s service tax accounting basis of either payment basis or invoice basis, any payment received before 1 March 2024 in relation to any services provided on/after 1 March 2024, the payment is subject to the old rate 6%.
Taxable Services Fully Provided Before Effective Date of Rate Change
Example:
1) In the event that the entire taxable service is provided before 1.3.2024 and the entire payment is received before 1.3.2024, the taxable service is charged at a rate of 6% on the value of the taxable service provided before 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | ||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | |
| 10,000.00 | 10,000.00 | 10,000.00 | – | – | – | 6% x RM10,000 |
2) In case the entire taxable service is provided before 1.3.2024 and the entire payment is received on/after 1.3.2024, the taxable service is charged at a rate of 6% on the value of the taxable service provided before 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | ||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | |
| 10,000.00 | 10,000.00 | – | – | – | 10,000.00 | 6% x RM10,000 |
3) In case the entire taxable service is provided before 1.3.2024:
a) partial payment received before 1.3.2024
b) partial payment received on/after 1.3.2024
Taxable services are charged at a rate of 6% on the value of taxable services provided before 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | ||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | |
| 10,000.00 | 6,000.00 | 6,000.00 | – | 4,000.00 | 4,000.00 | 6% x RM10,000 |
Taxable Services Fully Provided On/After Effective Date of Rate Change
Example:
1) In the event that the entire taxable service is fully provided on/after 1.3.2024 and the entire payment is received before 1.3.2024, the taxable service is charged at a rate of 6% on the value of the payment received before 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | ||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | |
| – | 10,000.00 | 10,000.00 | 10,000.00 | – | – | 6% x RM10,000 |
2) In case the entire taxable service is fully provided on/after 1.3.2024 and the entire payment is received on/after 1.3.2024, the taxable service is charged at the rate of 8% on the value of the payment received on/after 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | ||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | |
| – | 10,000.00 | – | 10,000.00 | – | 10,000.00 | 8% x RM10,000 |
3) In case the entire taxable service is fully provided on/after 1.3.2024:
a) partial payment received before 1.3.2024
b) partial payment received on/after 1.3.2024
taxable services are charged at a rate of 6% on the value of payments received before 1.3.2024 and 8% on the value of payments received on/after 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | ||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | |
| – | 10,000.00 | 4,000.00 | 10,000.00 | – | 6,000.00 | 6% x RM4,000 8% x RM6,000 |
Taxable Services Provided Before the Effective Date of the Rate Change and Beyond the Effective Date of the Rate Change
In the event that taxable services are provided before 1.3.2024 and beyond 1.3.2024, service tax is imposed by apportionment as follows:
a) taxable services provided before 1.3.2024, service tax is charged at a rate of 6%; and
b) taxable services provided on/after 1.3.2024, service tax is charged at the rate of 8%.
However, any payments received before 1.3.2024 in relation to services provided on/after 1.3.2024, taxable services are charged at a rate of 6% on the value of payments received before 1.3.2024.
| Before 1.3.2024 | After 1.3.2024 | SST rate apply | |||||
| Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | Services Provided (RM) | Total Invoice Issued (RM) | Amount of Payment Received (RM) | ||
| 1 | 2,000.00 | 12,000.00 | 12,000.00 | 10,000.00 | – | 6% x RM12,000 | |
| 2 | 6,000.00 | 36,000.00 | 18,000.00 | 30,000.00 | 18,000.00 | 6% x RM6,000 6% x RM12,000 8% x RM18,000 | |
| 3 | 2,000.00 | 12,000.00 | – | 10,000.00 | 12,000.00 | 6% x RM2,000 8% x RM10,000 | |
| 4 | 6,000.00 | 36,000.00 | – | 30,000.00 | 36,000.00 | 6% x RM6,000 8% x RM30,000 | |
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