Malaysia Sales & Services Tax (SST) Update was implemented effective 1 September 2018. It is single-stage taxation, which means that businesses that incur SST on their acquisition are generally not eligible for a credit of the SST incurred on their costs/acquisitions (like previous GST).
1 Jan 2019, requirement for Malaysian businesses to self-account for 6% service tax upon procuring certain services from foreign service providers (remark: this category is very wide, but for make it simple and direct to the point relevant to us it cover software license, cloud and online license subscription etc, full list please refer government official website). This requirement applies even to Malaysian businesses that are not service tax registered. That mean to make sure oversea sourcing item impose 6% SST, and Malaysian end company got to declare it and the goods to Malaysia market already come with that embedded to the final sell price.
With this implementation, so in Malaysia market, software license that origin from and developer from oversea will gain 6% SST and required embedded it, so in the tax column for the invoice will not show the software and other item under import tax services category. But other local origin IT services (for example, that related to our business, include consultancy, training, maintenance support) all will carry 6% SST and those will show up in the final tax column. For oversea supplier, your end no need to do anything, as per Malaysia tax authority instruction, we will help to make the declare and pay those tax, so it will become part of the new revised list price).
In short and summary, software will not show in the final tax (as it now declare under import tax service, as part of SST) and embedded into the price. But the rest of local IT services, consultancy, project management, training services and maintenance support or managed services all carry 6% SST as usual. E-SPIN Sdn Bhd will immediate implementation as per government latest tax regulation instruction and compliance accordingly with immediate effect. All quotation out from today will be accordingly to the new tax revision standard and regulation compliance.
Another things also worth to highlight, it for company under the same tax category like E-SPIN Sdn Bhd, category G IT Services Providers will be tax exemption, that just need those company to provide proof of document, and inform E-SPIN Sdn Bhd, the deal will be tax exemption (remark: if it is internal or by your own consumption, than it can not exemption, it must be proof, usually it resell to another end customer, so government this way arrangement can avoid double tax to the end customer. Special remark: this is for local origin IT services only). We just need to report which company, and attached the supporting document given back to government during the SST tax submission.
For the same, if any supplier is under the same tax category, for all the supply should exclude SST tax as per tax exemption revision and published from the Malaysia tax authority regulation compliance.
Above is impact on Malaysia market, and E-SPIN Sdn Bhd (local Malaysia SST registrant) only, and it do not affect other countries business you are doing with E-SPIN International Pte Ltd and E-SPIN International Ltd.
Please monitoring for the changing regulation and revision closely, above notice will subject to change again, if new revision or additional tax regulation is come in effect by local tax authority.