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Introduction
Construction service tax implemented since July 2025, it is time to look into your SST compliance history and records because your business should have submitted many SST returns to Customs since 2025.
The Customs department will perform more frequent and thorough audits to ensure the registrants are declaring and paying the precise amount of tax which they should (Ikrar Betul, Bayar Betul). In order to achieve this, the registrants need to apply the correct SST treatment and be prepared for the upcoming SST audit. With the implementation of e-Invoice, i.e. the digital transformation in the AI era, the tax authorities will have faster and more efficient tools to carry out their audit.
Impact to businesses can be major if you are not well prepared to ensure your business activities are SST compliant. Businesses should start reviewing their return and records because SST is a transaction based self-compliance tax system and heavy penalties and back taxes are imposed upon failure to comply with the rules and regulations.
- Module 1.1: SST audit framework
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- SST auditors’ roles and responsibilities
- Auditors and auditee’s right
- Manner and time frame of an audit
- Evidence and supporting documentation required
- Module 1.2 SST Field Audit Process and gap analysis
- Field audit, the do and don’t
- Identify the gap and look for rectification procedures to close the gap
- Module 1.3: Hot areas of audit
- Late registration due to other taxable services
- Treatment of construction services exemption
- Examine whether the main-contractor/sub-contractors are registered in the right group? Consequences for services registered in the wrong group
- Agreement duly stamped and its timing?
- Determination of non-taxable construction income (goods and services)
- Same group of companies exemption (relief) whether applicable for construction industry?
- B2B exemption verification
- Finance minister exemption verification
- Verification of invoice and adjustment notes content (including e-invoice requirement)
- SST-02 form declaration (item 18 c and 18 d)
- Back charges subject to service tax?
- Check the services provided between or within the Designated Area and Special Area
- Check on retention sums SST due date
- Module 1.4: Verify the documents to split the building materials from construction works
- Documentation from Developer/ project owner to main-contractors/ turnkey contractors
- Main-contractors and sub-contractors’ exemption eligibility
- Treatment of V.O., omission and LAD
- Verify the building material cost
- Going through the installation-related contracts, e.g. renovation works. To determine whether the contract separately state the supply of goods and services
- Mixed development project documentation determination, e.g. Majlis development order
- Module 1.5: Service Tax Back Taxes and Penalty Appeal Process
- Compute potential liabilities and back taxes discovered from the Module 1.3
- Appealable matters
- Parties and timing of the appeal
- Group Exercise: Fill up the form of appeal
- Choose the best appeal channel
- Advantages of the Voluntary Disclosure (VD)
- Jointly and several liabilities of directors
Q & A Session