Service tax waivers tweaked to aid public

KUALA LUMPUR: The Finance Ministry has refined the scope for service tax exemptions to alleviate the direct impact on the people’s cost of living as well as cascading tax incidents in the logistics sector.

Finance Minister II Datuk Seri Amir Hamzah Azizan said the Service Tax exemptions for the logistics sector and maintenance services would also help to maintain the competitiveness of the nation’s services sector.

“To further preserve the country’s competitiveness, the government will also not impose service tax in free trade zones,” he said yesterday.

He added that to ease the tax impact on daily logistics operating activities, and ultimately the consumers, the government has agreed to amendments to Group J: Logistics Services in First Schedule, Service Tax Regulations 2018.

“Item 1(a) in relation to logistics services, and Item 1(b) on delivery, distribution or transport services have been merged into a single item.

“By combining the two items into one, the exemption scope for business-to-business activities has been widened whereby logistics service providers classified under Item 1(a) are now no longer required to incur service tax for acquiring delivery, distribution or transport services.”

He said previously, logistics service providers under Item 1(a) were entitled to tax exemptions for acquiring services under the same item only.

He added that all services under Group J: Logistics Services provided in or between special area/designated area are not subject to service tax, except for customs agent services where the tax remains applicable.

“Free commercial zones and free industrial zones, such as the Port Klang Free Zone and West Port in Selangor, as well as the Pasir Gudang Port in Johor, shall benefit from this exemption.” – Bernama