KUALA LUMPUR, April 1 – The Ministry of Finance has delineated the scope of service tax exemptions to help alleviate the direct impact on the cost of living and instances of multiple taxation for the logistics sector. According to YB Senator Datuk Seri Amir Hamzah Azizan, Second Finance Minister II, the exemption aims to reduce the cost of living for citizens while ensuring the continued competitiveness of the country’s service sector.
To further maintain the sector’s competitiveness, the government has decided not to impose service tax in free zones, he explained. To mitigate the impact on daily logistics operations and indirectly on consumers, the government has agreed to amend Group J: Logistics Services in the First Schedule of the Service Tax Regulations 2018. This amendment broadens the scope of exemptions for business-to-business (B2B) transactions. Previously, logistics service providers under Group J: Item 1(a) were only exempt from service tax on acquisitions within the same category.
Now, with the amalgamation of logistics and delivery services under one category, these providers are eligible for wider exemptions, streamlining operations and reducing costs for businesses and consumers alike. Additionally, the government has extended service tax exemptions to maintenance services related to residential properties, including repair works and sinking fund contributions, effective March 1, 2024. These enhancements reflect the government’s commitment to supporting essential services and easing the financial burden on citizens.
