Malaysia: Budget 2019 Indirect Tax Updates

November 2018 | Malaysia

On 2 November 2018, the Malaysia Minister of Finance tabled the 2019 National Budget.

The key indirect tax proposals are as follows:

Excise duty on sweetened beverages

Currently, there is no excise duty levied on sweetened beverages. However, it has been proposed by the Malaysia Government that beginning on 1 April 2019, excise duty will be introduced on sweetened beverages that are being manufactured in the form of ready to drink. The excise duty rate of MYR 0.40 per litre will be charged on the sweetened beverages.

Service tax on imported services

Currently, there is no service tax levied on prescribed services supplied by foreign service providers. However, it has been proposed by the Malaysia Government that service tax will be imposed on the taxable services supplied by both local and foreign service providers.

Online services imported by consumers (“Digital Tax”)

It has been proposed that foreign service providers providing online services to Malaysia consumers will be required to register for service tax with Malaysia Customs and charge service tax.

Reduction of import duty rate on bicycles

Currently, the importation of bicycles (other than racing bicycles and bicycles designed to be ridden by children) falling under the HS tariff code 8712.00.30 00 are subject to import duty at the rate of 25%. Effective from 1 January 2019, import duty rate is proposed to reduce from 25% to 15% on such bicycles.