SST - Guide On Customs Agent Services

“Customs agent” means any person approved under section 90 of Customs Act 1967 to undertake any customs transactions on behalf of another person

“Designated Area” (DA) means Labuan, Langkawi and Tioman.

“Special Area” (SA) means any free zone, licenced warehouse and licensed manufacturing warehouse and Joint Development Area.

Overview of Customs Agent Services

Customs agents may act on behalf of importers and exporters to carry out the business to relieve goods from customs control. Customs agents consist of shipping agents and forwarding agents.

Prescribed services under service tax for a customs agent is the provision of services for clearing of goods from customs control. Other services supplied by a customs agent are not subject to service tax.

There is no threshold for the purpose of registration under service tax. Applicant need to be a registered person under the Service Tax Act 2018.

The rate of service tax shall be charged at the rate of 6%. 

Service Tax Treatment for Customs Agent Services

For service tax purposes, only the provision of services for clearing of goods from customs control will be subjected to service tax. Services for clearing of goods includes: 
(i) Preparing or amending customs declaration
(ii) Presenting goods for customs declaration

Example 1 

A Customs agent charged his clients for the following services: 
(i) Services for clearing of goods from customs control; and 
(ii) Presenting goods for customs checking. 

Both services are subjected to service tax.

Example 2 

When a customs agent need to perform goods inspection out of normal working hours, the agent will charge an overtime fee to his customer. 

The overtime fee will be subjected to service tax because it is part of the provision of services for clearing of goods from customs control.

Example 3 

A customs agent may appoint a third party to represent him in performing physical goods inspection. 

In doing so, the fee charged by the third party to the customs agent which is subsequently charged to the customer whether it includes a mark-up, it will be subjected to service tax.

A customs agent may also supply the following services to his customer which are not subjected to service tax: 

(i) Providing transportation services for shipments of goods; 

(ii) Acting as a guarantor to ensure that commercial operations take place under the agreed conditions;

(iii) Recommendation and advice at all costs in order to provide an alternative that is more profitable and efficient (however it may fall as prescribed services under consultancy services). This includes freight costs, port and customs expenses, consular fees, special documentation costs, insurance costs and freight management costs; 

(iv) Preparation and presentation of the documentation required for the exportation of the freight, such as the bill of lading and other proper documents for the seller, the buyer or any other third party involved in the process; 

(v) Advice (however it may fall as prescribed services under consultancy services) on the most suitable mode of freight transport and on the procedures of packaging, stowage and loading of the freight; 

(vi) Reservation of the cargo space required on a ship, aircraft, train or truck, haulier in addition to handling of the storage and/or distribution of the freight, and sometimes even by using the door-to-door method;

** A bill of lading is a legal document between a shipper and a carrier that details the type, quantity and destination of the goods being carried. The bill of lading also serves as a shipment receipt when the carrier delivers the goods at the predetermined destination. This document must accompany the shipped goods, no matter the form of transportation, and an authorized representative from the carrier, shipper and receiver must sign it. 

If a customs agent provides consultancy or management services and is required to be registered under Group G, First Schedule, Service Tax Regulation 2018, he is also required to charge service tax for the provision of services in relation to release of goods under customs control.

Responsibility of Registered Person

A registered person is responsible to: 

(i) Charge service tax on taxable services;

(ii) Issue an invoice and receipt to the customers in respect of any transaction relating to the provision of taxable services; 

(iii) Submit service tax return through SST-02 Form electronically and pay service tax before due date; 

(iv) Keep proper records.

Frequently Asked Question (FAQs)

Q : How to be a registered person? 

A : Customs agent are not subjected to any amount of threshold. Hence, all customs agent are required to be a registered person under service tax.

Q : Is haulage services part of prescribed services by customs agent? 

A : No. Haulage services is not a prescribed services under service tax therefore it is not subjected to service tax.

Q : A customs agent may supply different types of services which comprises prescribed services and non prescribed services. How to calculate the threshold for the purpose of registration? 

A : For the purpose of registration, the calculation of threshold only includes prescribed services. Other services that are not prescribed services will not be included in the calculation of threshold.

Q : A customs agent was charged by a third party, in performing his services for clearing of goods from customs control. The customs agent will then recover the cost from his clients. Does reimbursement subjected to service tax? 

A : Yes. If the reimbursement relates to the services of clearing of goods from customs control, any charges related to that services is subjected to service tax. For example, the reimbursement of charges by an electronic service provider (eg. Dagang Net) is subjected to service tax because it is a part of the process in clearing goods.

Q : Is the services of clearing goods from customs control by a customs agent who has a principal place of business in Malaysia but performs his prescribed services within the SA subjected to service tax? 

A : Yes, the services supplied within SA is subjected to service tax.

Q : Is the services of clearing of goods from customs control by a customs agent has principal place of business in Malaysia but performs his prescribed services within the DA subjected to service tax?

A : Yes, the services supplied within the DA is subjected to service tax.

Q : Is the services of clearing of goods from customs control by a customs agent who has a principal place of business in in the DA and performs his prescribed services within the DA subjected to service tax?

A : No, the services supplied within DA is not subjected to service tax.

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Edited by: 浪子

Bibliography:

Royal Malaysian Customs Department. (2018). Guide On Customs Agent Services. Retrieved from 

https://mysst.customs.gov.my/assets/document/BI_Guide%20on%20Custom%20Agent_formatted%20210812018%20rev7.pdf

Bill Of Lading. (n.d). Retrieved from https://www.investopedia.com/terms/b/billoflading.asp