The Ministry of Finance has expanded Service Tax exemptions to alleviate the impact on living costs and tax burdens in the logistics and maintenance sectors. Finance Minister II, YB Senator Datuk Seri Amir Hamzah Azizan, emphasized the aim to maintain competitiveness while easing the burden on citizens. The changes include:
Logistics Sector:
- Merge of logistics services and delivery/transportation services under a single item in Group J: Logistics Services, widening exemptions for business-to-business activities.
- Exemption from Service Tax for logistics services within or between special areas/designated areas, excluding Customs Agent services.
- Exemption from ocean freight charges for specific routes involving Peninsular Malaysia, Sabah, Sarawak, and Labuan.
Maintenance Services:
- Exemption from Service Tax for maintenance services related to residential buildings, sinking funds, and residential land/building maintenance by developers, joint management bodies, or resident associations. This includes repairs and maintenance of residential premises such as lifts, air conditioners, and water heaters.
These enhancements supplement the previously announced widening of Service Tax exemptions for the logistics sector. The recent increase in Service Tax rate from 6% to 8% mainly targets discretionary services and business-to-business transactions, excluding essential services like food and beverage, telecommunications, and vehicle parking.