MBAM urges govt for tax exemptions on intragroup services within logistics services

• This is in response to the government's implementation of an increase in service tax to 8% from 6%, and its scope expanding to cover logistics services, which will be taxed 6% come April 1 this year.

KUALA LUMPUR (March 15): Master Builders Association Malaysia (MBAM) urges the government to provide tax exemptions for intragroup services in logistics and maintenance and repair services, and not only for the same taxable services under the logistics services. Intragroup services are any services provided by related companies, and these services should be tax exempted.

This is in response to the government's implementation of an increase in service tax to 8% from 6%, and its scope expanding to cover logistics services, which will be taxed 6% come April 1 this year.

“The increase, especially coupled with the broader inclusion of logistics services, poses a significant threat to the construction industry and its stakeholders. The added financial burden on consumers will inevitably result in an upsurge in the cost of goods, affecting the affordability and accessibility of construction materials,” said MBAM president Oliver Wee (pictured) in a statement.

“Members of the MBAM fear that such a tax hike could impede economic growth. The construction sector, being a vital pillar of Malaysia's economy, plays a pivotal role in creating jobs and fostering infrastructure development. Any hindrance to its progress will have far-reaching consequences on employment rates and national prosperity.”

Additionally, Wee hopes that the government will consider business-to-business exemption for maintenance and repair services, which is currently not available.

“This is to avoid multi-tier tax on the same products and services. If the government can consider accepting our appeal, this will help to assist our members and the construction industry to get some much needed relief with the current service tax increases,” he said.

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