Service Tax Case Study

QUESTION 1 (a) SST (Sales and Service Tax) is a form of indirect taxation levied in Malaysia and single stage consumption tax. Sales Tax is imposed on consumers, collected by business enterprises and accountable to the Royal Malaysian Customs and Excise Department. The law governing the imposition of sales tax is the Sales Tax Act 1972 (Act 62) which takes effect from 29 February 1972. Income tax or real property gains tax on the contrary is a form of direct taxes as the taxpayer pays the taxes directly to the tax authorities. Hence, this tax not imposed on personal or professional services, sales of real property, or on sales of intangible property. The SST rate is between 5% to 10% and the threshold varies from RM0 to RM 3 million for service

Although, this tax is collected by the individual, partnership or companies are accountable to the Royal Customs and Excise Department. The law governing the imposition of service tax is the Service Tax Act 1975 (Act 151) which takes effect from 1 March 1975. Likewise, service tax at a rate 6% shall be charged on and paid by a taxable person who carries on a business of providing taxable service. Also, the diagram below show how does the SST

Likewise, the sales tax will be imposed on every single of taxable goods which is an importer of taxable goods and manufacturer on sale, disposal of taxable goods in Malaysia.

Scope charge of Service tax Act, 1975 is charged and applies on taxable services provided by taxable persons. Also this tax imposed throughout Malaysia with the exception of Labuan, Langkawi, and the Joint Development Area. As such, taxable services provided by taxable persons located outside Malaysia would not be liable to service tax. A schedule of Service Tax Regulation 1975 (STR 1975) lists out of numerous categories of taxable person into groups and also corresponding taxable services, liable for service tax. The groups can be brief as:

A