; THE ASSOCIATION OF CONSULTING ENGINEERS MALAYSIA, ‘Company No. 5070-4 PERSATUAN JURUTERA PERUNDING MALAYSIA, ‘Suite 20-9, Level 20, Menara MK, No. 1, Jalan Kiara, Mont’ Kiara, 60480 Kuala Lumpur, Malaya Tol: +60 3.6211 0031 / +460 12.519 0031 / +60 12 529.0031 E-mal sec@[Link] Website: [Link] my 28 January 2019 Your ref ‘ASZ/2019/30360 Our ref aes ceed TO ALL MEMBERS ics hah abe Dear Members omen Teme DIALOGUE WITH THE ROYAL MALAYSIAN CUSTOMS DEPARTMENT eowirtttesee (RMCD) ON SALES AND SERVICE TAX (SST) RELATED ISSUES We wish to inform that in view of queries raised by members on the implementation of SST by RMCD, ACEM had requested for a dialogue with RMCD to clarity a number of common issues raised by members. ——- The dialogue was held on 11th December 2018. We attach a copy of the minutes of meeting from the dialogue for members’ information see The minutes as attached provides clarity on the issues raised by members. A eer public ruling has already been issued on item (1) of the minutes. In the ont ateeanca meantime, we are fellowing up with MOF on item (2) ofthe minutes. ee ‘We will continue to engage with RMCD on any other issues related to SST as Se necessary. Perlis Thank you. Yours faithfully "ooeoere THE ASSOCIATION OF CONSULTING ENGINEERS MALAYSIA a IR, ANUAR MOHD ARIS Honorary Secretary AMAIASZ AEB sess nsccnouce aS HE WERE same HAFAN, Constunecexcners[No ISSUES RAISED RESPONSE /CLARIFICATION BY RMCD 1 | Under the RMCD General Guide for The Service Tax Regulations 2018 were proposed Service Tax 7 September 2018, sub- _| to be amended whereby effective from 1st | consulting payments are also subject to | January 2019, taxable services given between SST and will become a huge additional _| persons in Group G will be exempted from cost to the companies. Service tax | service tax. should be a single tier tax system. | However, itis not with this ruling However, exemption will be given only to persons providing the same taxable service. 2 | We also need clarification on what are | Example as illustrated below: classified as Reimbursement and A disbursement is where the invoice is billed Disbursement. The first is subject to. _| under the customer name. Company B only pays SST while the latter is not. on behalf of the customer. A reimbursement is part of the service provided by Company B. Any cost incurred and passed to ‘the customer is the components of value of the service provided. For example, travel, printing, telecommunication charges. Therefore, site supervision and site allowances must be included in the cost for providing the service even though such charges were not | subject to SST under the previous SST regime. ‘ACEM will write to MOF for an exemption on site allowances. 3. | Under RMCD Guide on Transitional | Amendment to DG's Decision 1/2018 and 2/2018 Rules 5 September 201 8, retention _| states that tax invoice is allowed to be issued | sum for services rendered before | June | after 1 st September 2018 for supply made | 2018 will be subject to GST and we before 1 st September 2018. | need to remit the payment to the Government by end ofthe year. We | Company is required to submit final GST return have no recourse to claim back the i for the last taxable period before 29 th payment when we bill the invoice later December 2018 as the GST, as the law has been repealed. Thus, it becomes an additional cost to the companies. However, any extension of time to account for tax in the case of retention sum has to be made to Director General for his approvalNO. ISSUES RAISED RESPONSE /CLARIFICATION BY RMCD Under RMCD Guide on Management Services 25 August 201 8, we are also affected by the management fee charges by our holding company to our subsidiaries and associated companies that we serve. For example: Holding company will charge premium to its subsidiaries. (Intra group billing) In these circumstances, exemption from service tax is given under paragraph 3 of the First Schedule, Service Tax Regulations 2018 where taxable services specifies m (a), (b), (c), (a), (e), (f), (8), (h) oF (i) in column (2) in Group G given by a company to another company the same group. Client supply staff to Company A. Company A will pay the staff salary and further charges margin. This will not be subject to service tax under item (j) (i) in column (2) in Group G, First Schedule, Service Tax Regulations 2018.