KUALA LUMPUR: The government has agreed to widen the scope of business-to-business (B2B) logistics services that are exempted from paying service tax.
Finance Minister II Senator Datuk Seri Amir Hamzah Azizan said the exemption is aimed at reducing the incidence of double taxation and a cascading effect from the tax-on-tax imposition at various levels of the logistics supply chain.
“With the expanded scope of B2B exemption, a freight forwarder, for example, will not only be exempted from paying the tax for freight services (procured from other companies) but is also eligible for exemption for other services such as warehousing, berthing, shipping, and cold chain facilities that are grouped together with the freight services,” he said in his winding-up speech on the Motion of Thanks for the Royal Address in the Dewan Rakyat today.
Hence, the minister said, newly-registered logistics service providers have been given a month to prepare and will only be imposed a six per cent service tax starting from April 1, 2024.
“The Finance Ministry hopes this special consideration will support further the growth of the country’s logistics sector while ensuring that consumers and businesses are not burdened,” he said.
He added that the ministry will continue to hold engagement sessions with industry players, especially those from the logistics sector, to finalise the amendments to the guidelines for enforcing the tax.
Amir Hamzah said the government understands the need for industry players to have sufficient time to modify their computing systems.
Previously, the government has given service tax exemption for logistics services involving direct export of goods, transshipments, transit activities, door-to-door logistics services, and food and beverage delivery services related to e-commerce.
This was based on feedback received following 25 engagement sessions with various stakeholders including the logistics sector proior to the implementation of the tax change. -Bernama
