Changes to the SST Landscape
On 31 December 2018, the Federal Government had amended the Sales Tax and Service Tax legislation by gazetting the following Regulations and Orders which came into operation on 1 January 2019:
- Sales Tax (Customs Ruling) (Amendment) Regulations 2018;
- Sales Tax Regulations (Amendment) 2018;
- Sales Tax (Goods Exempted From Tax) (Amendment) (No. 4) Order 2018;
- Sales Tax (Persons Exempted From Payment Of Tax) (Amendment) (No. 2) Order 2018;
- Sales Tax (Imposition Of Sales Tax In Respect Of Special Areas) (Amendment) Order 2018;
- Sales Tax (Rates Of Tax) (Amendment) (No. 3) Order 2018;
- Service Tax (Customs Ruling) (Amendment) Regulations 2018;
- Service Tax Regulations (Amendment) (No. 3) 2018; and
- Service Tax (Persons Exempted From Payment Of Tax) Order 2018.
Highlights of the key changes in the amended legislation are as follows:
1. The following persons are given exemption from paying Service Tax for specific taxable services that are acquired, subject to other prescribed conditions:
- A professional services provider (excluding an employment services provider and a private agency) registered under Group G in the First Schedule of the Service Tax Regulations 2018 is exempted from paying Service Tax when the provider acquires similar taxable professional services from another registered provider. The services must be those which are of the same items of service e.g. the service provider acquire management services and he himself provides management services to customers.
- An advertising services provider registered under Group I in the First Schedule of the Service Tax Regulations 2018 is exempted from paying Service Tax when it acquires advertising services from another registered provider that is registered under the same Group I.
2. Training and coaching services are prescribed as a form of taxable consultancy services and thus subject to Service Tax.
3. Management services that are prescribed to be subject to Service Tax have been limited to only the following types of management services:
- Project management services;
- Tourism management services;
- Logistics management services;
- Maintenance management services;
- Warehousing management services;
- Collection and debt management services;
- Car park management services;
- Sports facilities management services;
- Secretarial management services;
- Any management services other than the above made on behalf of another person.
4. Registered manufacturers are allowed a Sales Tax deduction when it purchases raw materials, components or packaging materials from a non-registered manufacturer whereby the sales deductions allowed are as follows:
- 2% deduction of the taxable value is allowed to be claimed for taxable goods which are subject to 5% Sales Tax;
- 4% deduction of the taxable value is allowed to be claimed for taxable goods which are subject to 10% Sales Tax.