Service Tax Issues : Telecommunications

Telecommunication Services and other services in connection with telecommunication services

GROUP I: OTHER SERVICE PROVIDERS

(1)	(2)	(3)
Taxable person	Taxable service	Total value of taxable service
2. Any person providing telecommunication services and any content applications service provider who is registered under the Communications and Multimedia Act 1998 [Act 588] or licensed under the Communications and Multimedia (Licensing) Regulations 2000 [P.U. (A) 129/2000].	(a) Provisions of telecommunication services and other services in connection with the telecommunication services, excluding provisions of telecommunication services to another telecommunication service provider in Malaysia or outside Malaysia. (b) Provision of subscription broadcasting services.	RM 500,000

Act 588 : COMMUNICATIONS AND MULTIMEDIA ACT 1998-

“content” means any sound, text, still picture, moving picture or other audio-visual representation, tactile representation or any combination of the preceding which is capable of being created, manipulated, stored, retrieved or communicated electronically;

“content applications service” means an applications service which provides content;

COMMUNICATIONS AND MULTIMEDIA (LICENSING) REGULATIONS 2000 [P.U.(A) 129/2000]:

"content applications service provider" means a person who provides a content applications service; 

"Internet access service" means an applications service whereby a person is able to access Internet services and applications in conjunction with either a dial-up connection or a direct connection; 

COMMUNICATIONS AND MULTIMEDIA ACT 1998

COMMUNICATIONS AND  MULTIMEDIA (LICENSING) (AMENDMENT)

REGULATIONS 2005-

“30. (1) A person who provides any or all of the following applications service may be registered as an applications service provider class licensee:

(a) PSTN telephony;

(b) public cellular services;

(c) IP telephony;

(d) public payphone services;

(e) public switched data service;

(f) audio text hosting services provided on an opt-in basis;

(g) directory services;

(h) Internet access services;

(i) messaging services; or

(j) such other applications service which are not exempt under the Act or not listed in this subregulation.

My Opinion:

1.    Taxable Services under Telecommunication services and other services in connection with telecommunication services covers a broad area i.e. as long as a person subscribes for  telecommunication services and accesses other services including Internet, cable TV, VOIP

2.    Telecommunication services and other services in connection with telecommunication services in Free Zones (FIZ and FTZ) and Duty Free Islands are a taxable service

3.    Bandwidth leasing (Penyewaan Litarsuwa) and Gateway charges are excluded. This addresses the problem faced by the Dept previously of processing refund claims by MVNOs of being charged Service tax on Bandwidth leasing as this tax was embedded again in their cost and charged service tax again on subscribers

See link: Customs Dept Guide on Telecommunication

As a perspective, Guidelines issued by the Dept for the guidance of Officers following Budget 2001 announcement are noteworthy (there has been advancement of Internet technology since with the introduction of Broadband, 3G, 4G and  coming 5G newer Broadband Telecommunications are in use today):

Berikut adalah panduan yang dikeluarkan pada tahun 2000 berikutan pembentangan Bajet 2001 yang meluaskan skop cukai perkhidatan keatas perkhidmatan telekomunikasi bagi memberi penjelasan kepada awam dan pegawai-pegawai. Teknologi telekomunikasi telah mengembang dengan pesat sejak itu dengan pengenalan Jalor-lebar, 3G, 4G dan sedang dibangunkan 5G:

Mana-mana orang yang menyediakan perkhidmatan komunikasi yang berdaftar di bawah Akta Komunikasi dan Multimedia 1998 atau yang dilesenkan di bawah Peraturan-Peraturan Komunikasi dan Multimedia (Pelesenan) 2000."

                      6.1.3 Perkatan "telekomunikasi" tidak digunakan, sebaliknya perkataan

"komunikasi" telah digunakan. Perkataan "komunikasi" telah ditakrifkan dalam Akta Komunikasi dan Multimedia 1998 sebagai apa-apa komunikasi, sarna ada antara orang dengan orang, benda dengan benda, :iaitu orang dengan benda, dalam bentuk bunyi, data, teks, imej visual, isyarat atau apa-apa bentuk lain atau mana-mana gabungan bentuk, bentuk itu. Oleh itu, takrifan baru ini adalah jelas dan luas serta ia juga meliputi perkhidmatan telekomunikasi yang hendak dikenakan cukai perkhidmatan selaras dengan Cadangan Belanjawan 2001,

                     6.1,.4  Selain daripada syarikat telekomunikasi besar yang telah dilesenkan sekarang, mana-mana orang yang berdaftar di bawah Akta Komunikasi dan Multimedia 1998 atau yang dilesenkan di bawah Peraturan-Peraturan Komunikasi dan Multimedia (Pelesenan) 2000 perlu memohon lesen di bawah Akta Cukai Perkhidmatan 1975 sekiranya ia menyediakan  perkhidmatan lebar jalur dan perkhidmatan-perkhidmatan nilai ditambah

6.2.2 Perkhidmatan lebarjalur mempunyai erti sepertimana yang diberikan dalam Peraturan 2, Peraturan-Peraturan Komunikasi dan Multimedia (Pelesenan) 2000. Mengikut Peraturan-Peraturan Komunikasi dan Multimedia (Pelesenan) 2000, perkhidmatan lebar jalur ditakrifkan sebagai suatu perkhidmatan rangkalan yang terurus yang membolehkan penghantaran unit unit maklumat dalam suatu penghubung dalam unit tempoh masa tertentu.

                     6.2.3  Daripada takrifan di atas, perkhidmatan lebar jalur sangat luas skopnya. la meliputi:

              i. penyewaan fitar suwa dalam bentuk "copper wires, coaxial cable, fibre optic,

                 microwave transmission or satellite transmission" dan termasuk Digitaline,

                 Digitaline It;

            ii. perkhidmatan "Integrated Services Digital Network (ISDN); (digantikan dengan B-ISDN)

            iii. rangkaian penghantaran data (data transmission network) seperti COINS,               MAYPAC, MAYCIS.