The term "Information Technology Services" (ITS) is defined as the use of any physical devices (e.g. networking, computers) or any processes to store, secure, process, create and exchange all forms of electronic data.
From the taxable service list (Group G), it is stated that ITS is a taxable service under the Service Tax Act 2018. Any individual or company who provide ITS will be liable to register for SST.
Types of ITS being excluded from service tax is as below:
- Sales of goods related to the provision of ITS.
- Provision of ITS that is related to country outside of Malaysia.
- Service providers within designated areas and special areas are not subjected to service tax if the principal place of business is in the designated areas.
- Services related to hardware and server
- Service provided by call centre
- Retailer and distributor of software
Types of ITS that's included is as below:
- Software/computer system developer
- Software maintenance
- Data subscription
- software or system development consultation services
For a detailed list of ITS that is included and excluded in service tax, you can refer to the official document.
To help you have a better understanding on how you should register for the ITS you provide, here is some example:
Example 1
Q: Company Z provides computer hardware maintenance to Company Y.
A: Company Z does not need to charge service tax on the hardware maintenance provided.
Example 2
Q: Company X provides both hardware and software maintenance. Company X did not itemize the services.
A: If the company did not itemize hardware and software maintenance, both services are subjected to service tax, if the company's annual taxable service value exceeds RM500,000.
Example 3
Q: Company P provides licenses of an anti-virus software. The anti-virus software belongs to another company from oversea.
A: Company P is considered as a retailer providing the software to other company, but not developer of the software. Therefore, Company P is not subjected to service tax.
You can also visit the links below to read more on SST related topics in TreezSoft:
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