Introduction
The Guidelines on Vehicle Parking Services, published on 29 February 2024, provide directives on the service tax treatment for parking services under the Service Tax Regulations 2018.
Purpose
The guidelines aim to facilitate understanding on the scope of taxability, registration requirements, applicable tax rates and other operational aspects concerning vehicle parking services under the Service Tax system.
Key Points
- Service tax is chargeable on vehicle parking services provided for motor vehicles if payment is imposed by the parking operator.
- Parking operators who exceed the annual threshold of RM500,000 in value of taxable services need to be registered under the Service Tax Act.
- Service tax applies regardless of the parking payment method used e.g. Touch ‘n Go, auto-pay machines etc.
- Charges imposed by local authorities for parking spaces are also subject to service tax.
FAQs
1. Q: My company provides free parking to our employees within our office compound. Is this parking service taxable?
A: No, parking facilities provided by an employer to their employees at the place of work are excluded and not subject to service tax.
2. Q: I operate a paid parking facility. If discounted rates are provided to senior citizens or loyalty program members, how do I charge service tax?
A: Service tax should be charged on the parking fees after discount. The taxable value would be the actual fees paid by the customers enjoying the preferential rates.
3. Q: My shopping mall charges entrance fees for vehicles to enter the parking compounds, in addition to hourly or daily parking charges. Are the entrance fees taxable?
A: Yes, any parking entrance or access fees are considered part of taxable parking services. Service tax applies on such entrance fees.
4. Q: Does service tax apply on deposits or advance payments collected for providing season parking tickets to customers?
A: Service tax will be chargeable on any non-refundable advance payments or deposits meant for taxable parking services. Refundable deposits are not subject to tax.
5. Q: If my hotel charges room + parking packages to guests, what service tax rate applies?
A: The provision of accommodation services and vehicle parking services fall under different taxable service categories in the First Schedule of the Service Tax Regulations 2018.
Accommodation services are subject to the standard rate of service tax, which is 8% from 1 March 2024.
Meanwhile, vehicle parking services remain at the service tax rate of 6% as of 1 March 2024.
Therefore, for a room + parking package:
- The room rental portion is subject to 8% service tax
- The parking portion is subject to 6% service tax
The hotel should charge service tax accordingly at the different rates, and record the taxable values for the respective services separately in its service tax returns.
Conclusion
In essence, the guidelines establish service tax treatments and compliance requirements for businesses providing vehicle parking services.
A comprehensive coverage of rules, rates and operational issues is provided to ensure uniform adoption across parking facility operators.
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