Spotlight On: Malaysia Exempts Digital Payment Services from Service Tax

August 23, 2022
3 minutes read

Insight from our Asia-Pacific team

Spotlight On

The Royal Malaysian Customs Department has issued Service Tax Policy 1/2022 regarding the exemption from service tax of digital payment services rendered by local non-bank service providers, with effect from 1 August 2022 until 31 July 2025.

The key points of the policy are summarized below:

  • The Minister of Finance exempts the recipients of digital payment services provided by local non-bank service providers from paying service tax.
  • Following the above exemption, the following local non-bank digital payment service providers are exempted from levying service tax on digital payment services:
    • local non-bank payment instrument issuers;
    • local non-bank merchant acquirers; and
    • local non-bank payment system operators.

Note, however, that the exemption only applies to local service providers and that the service tax on foreign service providers remains in place.

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