Service Tax
Short Writeup
Providers of Services with an annual turn over of RM150,000 and above, are liable to pay this tax. As with Sales Tax, these taxpayers must hold a license to collect the tax and pay over the collected sums to Customs time to time. The relevant statute is the Services Tax 1975.
Departments & Agencies
The Royal Customs and Excise Department
Statutes & Regulations
Sales Tax Act 1972 [Reprint – 2001]
Effects of non-Compliance
Penalty for late payment of tax
Where any amount of service tax deemed payable remains unpaid after the last day on which it is payable under section 14 or repayable under section 21C, as the case may be;
(a) a penalty equal to 10% of such unpaid amount shall thereupon be payable;
(b) if the service tax due and payable remains unpaid for more than 30 days after the last day on which it was so payable or repayable the rate of penalty under paragraph (a) on such unpaid service tax shall be increased by 10% for the second period of 30 days after such last day and for every succeeding period of 30 days or part thereof during which such amount remains unpaid to a maximum of 50%. [Section 16].
Where service tax, penalty or surcharge is due and payable by-
(a) a company;
(b) a firm; or
(c) a society, an association or other body of persons,
then notwithstanding anything to the contrary in this Act or in any other Act, the directors of such company or the partners of such firms or members of such society, association or other body of persons as the case may be, together with such company, firm, society, association or other body of persons;
Provided that in relation to a company that is being wound up, the directors of such company shall only be liable where the assets of the company are insufficient to meet the amount due, after paying any sums having priority under the Companies Act 1965 in relation to the application of the assets of the company in such winding up over the service tax or penalty. [Section 17].
General penalty
Any omission or neglect to comply with and any act done or attempted to be done contrary to the provisions of this Act or the regulations, and in respect of which no penalty is expressly provided shall be an offence against this Act and the offender shall be liable on conviction to a fine not exceeding RM5,000 or to imprisonment for a term not exceeding 2 years or to both. [Section 34].
Service Tax License
(1) Every taxable person who carries on a business of providing taxable service shall apply to the senior officer of customs in the prescribed form for a license, and no taxable person shall carry on such a business unless he is in possession of a license issued under subsection (2).
(2) Subject to subsection (3), the Director General shall issue a license in the prescribed form.
(2A) Notwithstanding any other provisions in this Act or any regulations, any person who is licensed under this section or section 8A shall remain as a taxable person providing taxable service, and the provisions of this Act shall apply to him until his license is revoked.
(3) Before any license is issued under this section, or where a license has been issued under this section, the Director General may require the person applying for the license, or the holder of the license, as the case may be, to give such security for the due compliance by that person with the provisions of this Act and generally for the protection of the revenue as the Director General thinks fit; and where the Director General is at any time dissatisfied with any security given, he may require a new security in lieu thereof, or in addition thereto; and in default of such new security being given the Director General may suspend any license previously issued. During any suspension the holder of any license previously issued. During any such suspension the holder of any license issued shall be deemed to be unlicensed.
(4) Any person licensed under this section shall carry on the business only at the place or premises specified in the license issued under subsection (2).
(5) Where the whole or any part of a taxable person’s business of providing taxable service is transferred to another person, then for the purpose of determining whether that other person is required to be licensed under this section he shall be treated as having carried on the business of providing taxable service before as well as after the transfer of that business to him. [Section 8].
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