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Issue No. 47/2024 | 30 December 2024
Service Tax Policy No. 8/2024 – Service Tax Exemption on Fees or Commissions of Certain Local Commodity Trading Platform Transactions
The Royal Malaysian Customs Department (RMCD) recently issued the Service Tax Policy No. 8/2024 (“STP 8/2024”) dated 26 December 2024 to inform that the Minister of Finance has granted service tax exemption on fees or commissions of certain local commodity trading platform transactions.
The exemption which is deemed effective from 1 October 2024 is limited to the use of local commodity trading platforms for Islamic financial transactions only.
The recipients of the above qualifying local commodity trading platform services are exempted from paying service tax on fees or commissions charged by these platforms while the service providers of these platforms are exempted from charging service tax on the fees or commissions of the qualifying transactions.
The STP 8/2024 states that any service tax collected from customers up to 30 September 2024 must be remitted to RMCD and no service tax refunds are allowed for any person who has paid service tax before 1 October 2024.
The STP 8/2024 also states that local commodity trading service providers are encouraged to obtain a customs ruling from RMCD regarding the type of taxable service for fees or commissions charged on their platforms if this exemption is withdrawn in the future.
PwC Comment
The STP 8/2024 has a retrospective effective date of 1 October 2024 and the exemption provided is narrowly limited to the use of local commodity trading platforms for Islamic financial transactions only. We believe that the above exemption is granted so that certain Islamic financial transactions which involve trading of commodities do not become more costly or less attractive as compared to the conventional financial transactions.
It is also worth noting that RMCD has encouraged local commodity trading service providers to obtain a customs ruling from them in case the exemption is withdrawn in the future.
If you think your business is affected or may be affected by the above change or if you need any clarification or assistance, please do not hesitate to contact us and we would be happy to assist you.
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