Service tax

Service tax is a consumption tax levied and charged on any taxable service provided by any taxable person as governed under Service Tax Act, 1975. The Act applies throughout Malaysia but excluding Langkawi, Labuan, Tioman and the Joint Development Authority.

The rate is currently charges at 5% of the price, charge or premium of the taxable services.

“With effect from 1 January 2011, the rate will be revised to 6%.”

The definition of taxable person and taxable service are contained in the Service Tax Act, 1975. Any person who carries on a business of providing taxable service must apply for a service tax license and charge service tax accordingly on the taxable service provided / rendered.

Sales tax

Sales tax is a single stage tax imposed on taxable goods manufactured locally and/or imported. “Taxable goods” refers to goods of a class or kind not exempted from sales tax.

The Sales Tax Act, 1972 applies throughout Malaysia but excluding the Joint Development Authority, Labuan, Langkawi, Free Zones and Licensed Manufacturing Warehouse.

The rate is currently charges at either 5% or 10% depending on the class of goods. There are also exemption on goods for sales tax purposes.

Any person who manufacturing taxable goods is required to be licensed as a licensed manufacturer and charge sales tax accordingly on the taxable goods manufactured.

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