Intra-Group Billing & SST Exemption Explained

Does intercompany billing within the same group require a 6% SST? Not necessarily!

When 6% SST Can Be Exempted?

Under the Service Tax Regulations 2018 and Service Tax Policy No. 8/2020, Intra-Group Relief applies when the following conditions are met:

1. Within the Same Group

•  Companies must have a shareholding relationship: Direct or indirect ownership above 50% OR 20–50% ownership with control over board appointments.
• Supporting documents such as shareholding charts or board resolutions are required.

2. Service Type: Category G (Professional Services)

• Includes legal, accounting, engineering, management, consulting, IT, and digital services.
• Excludes employment agency and private agent services.

3. The “5% Rule” — External Clients ≤ 5%

• If the same service is also provided to non-group clients, exemption still applies as long as external revenue ≤ 5%.
• Once external clients exceed 5%, the entire service category becomes taxable (including intra-group transactions).
• Each service category (e.g., IT, management) must be assessed separately.

4. 12-Month Forward Assessment Period

• The group ratio is projected for the next 12 months.
• Regular reviews (monthly or quarterly) are recommended to prevent late-year breaches.
• If qualification is later met, a credit note may be issued to reverse SST.

Practical Tips

1.  Monitor external client ratio regularly.
2. Calculate each service category separately.
3. Keep ownership documents, contracts, and invoices properly filed.
4. From May 2024, repair and maintenance services are also eligible for exemption.
5. If external ratio fluctuates significantly, consider charging SST first and claiming back later.

Common Misconceptions

1. Same owner ≠ same group — must meet shareholding and control criteria.
2. Don’t mix service types — calculate each category separately.
3. Exceed 5% and the exemption is lost — full SST applies.

**Last Updated on 04.11.2025