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Issue No. 17/2025 | 20 September 2025
Service Tax Policy No. 1/2025 (Amendment No. 2) – Financial Services
The Royal Malaysian Customs Department (RMCD) recently issued the Service Tax Policy (STP) No. 1/2025 (Amendment No. 2) dated 17 September 2025 to amend the STP No. 1/2025 (Amendment No. 1) dated 30 July 2025.
Amendments were made to Item 1 and Item 2 of the STP 1/2025 as append below:
- Item 1 of the STP 1/2025 has been amended to state that the exemption period for fee or commission based financial services which are not listed in the Appendix A of the STP 1/2025 from service tax is from 1 July 2025 to 30 September 2025. With effect from 1 October 2025, all financial services that are charged for fees, commissions, or similar payments will be subject to service tax.
- Item 2 of the STP 1/2025 has been amended to clarify that the exemption for federal and state governments applies only to the services provided under the new scope expansion. This exemption does not apply to the services that were subject to tax before 1 July 2025.
PwC Comment
With the amendment in Item 1 of the STP 1/2025 as stated above, RMCD has effectively announced that the effective date for second phase of the implementation of service tax on fee or commission based financial services is from 1 October 2025. RMCD had previously stated in their guide that the effective date of the second phase was 1 September 2025. We understand that the one-month delay in the implementation was to allow financial institutions and affected persons sufficient time to prepare their accounting systems to take into account the service tax on the financial services.
If your business faces any difficulties in implementing the second phase of the service tax on financial services, or if you have any questions on the above and would like to know more on how we can help your business, please do not hesitate to contact us and we would be happy to assist you.
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