Latest Update SST - Group Relief on Provision of Taxable Service Within Group of Companies

Overview:

On 28.02.2020, the Royal Malaysian Customs Department (RMCD) has issued a Service Tax Policy (No.8/2020) to clarify Group Relief Facility on Service Tax and exemptions.

We summarize the key learnings for your understanding.

Key takeaways:

You will understand: -
1. Group Relief
2. The 5% exemption
3. Method to determine value of 5%

Summary of learnings:

A) Group relief

Provision of taxable services stated in item (a), (b), (c), (d), (e), (f), (g), (h) or (i), in column (2), Group G, First Schedule, Service Tax Regulations 2018 (STR2018) is subject to service tax.

If the services are provided to any person in the same group of companies, the company is eligible for group relief and the services provided is not subject to service tax.

However, when the same service is provided to any third party, Company will no longer eligible to group relief.

B) 5% Exemption

Effective from 1st January 2020, if the total value of the service to the third party does not exceed 5% of the total value of the service within 12 months. Company is still eligible to Group relief on the taxable service provide to group of members.

Please take note the taxable service to third party is still subject to service tax.

C) Method

Company shall use future method to determine the 5% of the service value, that is, current month and eleven months immediately preceding after that month.

The calculation of the 5% of the service value shall be the value of the same service provided to third party compare to the total value of the same service.

D) Sources:

Service Tax Policy No 08/2020: https://mysst.customs.gov.my/assets/document/Service%20Policy/STP%208_2020.pdf

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Group Relief for SST

taxKtp KtpNovember 13, 2020Group relief, SST