CCS

Guidelines for Consultancy, Training, and Coaching Services

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Introduction

The guidelines issued by the Jabatan Kastam Diraja Malaysia on 29 February 2024, aim to elucidate the scope and application of the Sales and Service Tax (SST) on consulting services, training, and instruction.

These guidelines are designed to ensure stakeholders are well-informed about the taxable consulting services under the SST regime, thereby facilitating compliance and accurate tax application across various sectors.

Purpose

The primary purpose of these guidelines is to provide clarity on the definition, scope, and examples of consulting services subject to SST.

This includes detailing the obligations of registered entities and the process for service tax payments, thereby aiding in the proper administration and compliance with the SST framework.

Key Points

1. Definition and Scope: The guidelines define consulting services subject to SST, including quality assurance services, computer industry consulting, and strategic IT planning, among others.

2. Taxable Services: Examples provided, such as the services offered by Quality Prime Machinery Sdn Bhd (QPMSB), illustrate the broad spectrum of consulting activities covered under the tax.

3. Compliance and Registration: Details on the registration process and the effective dates for the imposition of service tax on relevant services are outlined, ensuring entities are aware of their obligations.

Relevant FAQs

  1. Q: What is the threshold value for consultancy, training, or coaching services? A: The threshold value for consultancy, training, or coaching services is RM500,000.
  2. Q: For the purpose of calculating the threshold value, should it be calculated as a whole or separately if any person provides more than one taxable service within Group G? A: For the purpose of calculating the threshold value, any person liable to tax in Group G, with a total value of taxable services, whether combined or individual, exceeding RM500,000 for any one or more taxable services stated in Group G, is required to register.
  3. Q: Company A provides engineering, architectural, and consultancy services. The cumulative value of income for all three services is RM600,000 for the past 12 months. Is Company A required to register for the service tax? A: Yes. Company A is required to register for the service tax. This is because engineering, architectural, and consultancy services are taxable services under Group G where for threshold value purposes, the calculation needs to be combined.
  4. Q: Referring to consultancy services, will a service only be considered consultancy if it involves advisory services? A: No. For the purpose of service tax, besides advisory services, consultancy services also include grading/evaluation services, testing services, and training services. Please refer to paragraph 23(a)
  5. Q: Do registered persons need to issue invoices? A: Yes. Registered persons need to issue invoices for all taxable services provided.
  6. Q: How to submit statements and make payment for service tax? A: Registered persons need to submit service tax returns via form SST-02 electronically or manually. Service tax payment needs to be made electronically or by cheque, which should be mailed to the Customs Processing Center in Kelana Jaya.
  7. Q: When is the effective date of service tax imposition on training or coaching services related to goods or land located outside Malaysia or matters outside Malaysia? A: Effective from 26 February 2024, training or coaching services related to goods or land located outside Malaysia or matters outside Malaysia are subject to service tax.

Conclusion

The guidelines from the Jabatan Kastam Diraja Malaysia serve as a crucial resource for consultants, businesses, and tax professionals, ensuring clarity on the scope of taxable consulting services under the SST.

Stakeholders are encouraged to familiarize themselves with these guidelines to ensure compliance and make informed decisions regarding their obligations under the SST framework for consulting, training, and instructional services.

By adhering to these guidelines, entities can ensure they are in compliance with the latest tax regulations, thereby avoiding potential penalties and contributing to the integrity of Malaysia’s tax system.

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