Logistics Industry: All you need to know
about service tax |
In 2024, Malaysia’s Prime Minister announced
significant amendments to the Service Tax Regulations 2018 during the Budget speech, expanding the scope of taxable services. Among the sectors affected is the logistics industry. As announced during the Budget speech, logistics services are now subjected to a service tax at a rate of 6% starting from 1 March 2024. In this article, we’ll explore the implications of these changes for Malaysia’s logistics sector and provide insight to help businesses understand and navigate the evolving tax environment. What is the definition of
logistics services? Logistics services refer to the process of planning, implementing, and controlling the efficient and effective movement and storage of goods, services, and related information within a supply chain, from the original
location to the designated destination specified by the customer. What is the taxable service? Logistics services, delivery, distribution, or transportation of goods, documents, or packages including by using the E-Commerce platform or on behalf of any person, courier services, and customs agents who provide services for the release of goods from customs control are classified as taxable services under Group J, First Schedule, Service Tax Regulations 2018 and subject to
service tax. What is the threshold value set? For service tax registration purposes, the
threshold value for logistics, delivery, distribution, or transportation service providers under the Service Tax Act 2018 is RM500,000 in a 12-months period. Logistic service providers will have to register for service tax if their annual turnover exceeds this threshold value. However, for customs agents, no specific threshold value is set. What services are not subject to service tax in the logistics industry? According to the logistics service guideline, the RMCD has granted exemptions for several logistic services, which
involve: 1. Door-to-door delivery services. - goods delivery services from a place outside Malaysia to a place within Malaysia or from a place within
Malaysia to a place outside Malaysia without going through a third-party;
- goods delivery services by the same network service provider from the consignor to the recipient;
- goods delivered using the same airway bill/ bill of lading/ consignment note from the consignor to the recipient; or
- single billing invoice – same invoice for the delivery charges from the
consignor to the recipient.
2. Logistic services related to transit activities, i.e. goods arriving in Malaysia and then to another place outside Malaysia through land/ sea / air transport mode. 3. Ocean freight within Malaysia, i.e. delivery of goods between Peninsular Malaysia and Sabah/ Sarawak/ Labuan, delivery of goods within Sabah/ Sarawak/ Labuan. 4. Arriving at Malaysian customs ports or airports for the purpose of transfer or transshipment (Transshipment services). 5. Delivery of food and beverages. 6. Exemption for services in Special Areas and Designated
Areas: All services under Group J: Logistics Services provided in or between Special Area/Designated Area, between Special Area and Designated Area, or vice versa, excluding Customs Agent services. 7. Delivery of goods outside Malaysia. Furthermore, there is a Business-to-Business (B2B) exemption provided for logistic service providers, and the scope of the B2B exemption is extended to cover the provision of services under the same item. Would you be interested in learning more about the B2B exemption? |
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