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Service Tax on Imported Taxable Services Overview

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Comprehensive Analysis of Scope of Application, Filing Methods, Exemption Conditions, and Special Provisions for Digital Services

FAQs:

1. Import Service Tax Explanation

Under the First Schedule of the Service Tax Regulations 2018, imported services are taxable and include the following scope:

  • IT services
  • Software subscriptions
  • Advertising services
  • Legal services
  • Engineering services
  • Management services
  • Other professional services

2. Tax Liability

With effect from 1 January 2019, any person in Malaysia who acquires taxable services from overseas for business purposes is required to pay 6% service tax on imported services to the Royal Malaysian Customs Department (RMCD):

  • SST-registered person: Must file Form SST-02 every two months
  • Non-SST-registered person: Must file Form SST-02A on a monthly basis

Failure to comply may result in:

  • A fine not exceeding RM30,000
  • Imprisonment for a term not exceeding two years
  • Both

3. Exemption Provisions

With effect from 1 January 2020, SST-registered persons may be granted an exemption by the Minister from accounting for and paying service tax on imported taxable services, provided that the following conditions are met:

  1. The person is SST-registered
  2. The same taxable services acquired are also provided to customers
  3. The imported taxable services are used solely for the furtherance of business and not for personal consumption
  4. Payment has been made to the foreign service provider

4. Special Provisions for Digital Services

Local businesses are not required to self-account for the 6% service tax on imported digital services acquired from a Foreign Registered Person (FRP). This is because the FRP is required to charge and collect 6% service tax on digital services provided to consumers in Malaysia.

**Last Updated on 08.09.2025