KUALA LUMPUR: The Finance Ministry today clarified that the decision to include repairs and corrective maintenance under the amended Service Tax (ST) was to avoid confusion on the definition of maintenance.
Finance Ministry's Treasury secretary-general Datuk Johan Mahmood Merican told a media briefing on Wednesday that there had always been ST on maintenance but it was on scheduled and preventative maintenance.
"Repairs and corrective maintenance were not subject to tax. But that brings into question definition issues. Therefore now, all types of maintenance is covered under service tax," he said.
The matter came to light after a federal government gazette on an amendment to the ST regulation was published on the Attorney General Chambers' website last Friday.
In it it said ST would be imposed on almost all maintenance and repair services from Feb 26, 2024.
Before Feb 26, 2024, only maintenance management services (preventive) was subject to ST.
Corrective maintenance was not subject to ST.
Sinking fund, and maintenance charges imposed by the developer/ joint management body/ management corporation for residential buildings however were exempted from ST.
After Feb 26, 2024, all maintenance services regardless of preventive or corrective are subject to the ST.
Exemptions for residential buildings remain with an addition for repair.
Johan explained that the implementation date of March 1, 2024 for the new service tax applies to existing registered companies that provide existing taxable services and new taxable services.
New registered persons that provide new taxable services will be given an additional grace period of one month, pushing the effective date to charge the service tax to April 1.
The threshold for ST registration is RM500,000.
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