Report: Traditional Chinese medicine practitioners now asked to pay 6pc SST since 2018, awaiting Customs, MoH clarification

KUALA LUMPUR, Dec 29 — The Royal Malaysian Customs Department (RMCD) has written to traditional Chinese medicine practitioners to ask that they pay service tax dating back to 2018 — which was when the sales and service tax (SST) regime was revived to replace the now-abolished Goods and Service Tax (GST), a report has said.

In an exclusive report by local daily China Press yesterday, industry players were said to understand that the service tax is to be imposed for complementary services used to treat patients under traditional Chinese medicine, such as acupuncture, Tui Na, cupping therapy, and Gua Sha.

The news report listed the other typical traditional Chinese medicine services as including moxibustion, and pulse diagnosis.

China Press, however, said the situation was still unclear, and quoted Malaysian Chinese Medical Association (MCMA) president Dr Heng Aik Teng as saying that the scope of services that would have service tax was still pending clarification from RMCD and the Health Ministry.

Dr Heng said the RMCD letter was received in mid-December but said industry players had not been directed to pay SST previously when their auditors submitted taxes and carried out accounting work, and that the relevant service tax provisions were unclear and did not clearly state that traditional and complementary medicine services are taxable under SST.

The service tax in Malaysia is currently 6 per cent, but the government has proposed under Budget 2024 to raise the service tax to 8 per cent on March 1, 2024 for all taxable services (except for food and beverage, telecommunication services, vehicle parking space services and logistic services).

One of the categories of taxable services which is taxable currently at 6 per cent and expected to be taxed at 8 per cent is “Nightclubs, Dance Halls, Cabarets, Health and Wellness Centres, Massage Parlours, Public Houses and Beer Houses”.

In the same report, Dr Heng noted that western medicine practitioners are exempt from such service tax, but that traditional and complementary Chinese medicine were categorised under the taxable category which includes health and wellness centres instead of being categorised as medical treatment.

He said MCMA had written to the Health Ministry, and the ministry has indicated its willingness to help and that RMCD would be invited to a session with industry players to explain the collection of the service tax.

He reportedly said MCMA is currently arranging for a tax consultant to explain to members regarding the service tax collection for traditional Chinese medicine services, to enable them to understand the scope of tax ahead of the Health Ministry’s and RMCD’s explanation session and pose good questions during the session.

He said RMCD has given a grace period until May or June next year, where those who pay the outstanding taxes would not face fines.

He also reportedly said patients may be affected if the government does not provide tax exemption for traditional and complementary Chinese medicine services.

According to China Press, the letter from RMCD was sent out to eight bodies, including those representing traditional Malay medicine, traditional Indian medicine practitioners and traditional Islamic medicine practitioners.

These eight bodies are the Federation of Chinese Physicians and Acupuncturists Associations Malaysia (FCPAAM), the Federation of Chinese Physicians and Medicine Dealers Association of Malaysia (FCPMDAM), the Gabungan Pertubuhan Pengamal Perubatan Tradisional Melayu Malaysia (Gapera), the Pertubuhan Perubatan Tradisional India Malaysia (Peptim), the Malaysian Homeopathic Medical Council (MPHM), the Federation of Complementary & Natural Medical Associations Malaysia (FCNMAM), the Persatuan Perubatan, Pengubatan dan Kebajikan Islam Malaysia (Darussyifa’), and MCMA.

In the same news report, China Press also said the Health Ministry’s Traditional and Complementary Medicine Division had on December 14 sent out a letter which notified that traditional Chinese medicine was included as taxable under SST.

China Press showed that December 14 letter, where the division notified that traditional and complementary medicine was included as a taxable service for service tax under the category “Nightclubs, Dance Halls, Cabarets, Health and Wellness Centres, Massage Parlours, Public Houses and Beer Houses”, once a threshold value of RM500,000 is met.

The Health Ministry division also said many premises offering traditional and complementary medicine do not realise the need to register and pay service tax once they cross the threshold value of RM500,000, noting that this has been in effect since 2018.

Citing discussions with the RMCD, the Health Ministry division said RMCD is requesting and encouraging traditional and complementary medicine premise owners to voluntarily disclose the tax amount they are supposed to pay under the Voluntary Disclosure Programme, which grants a full amnesty on penalties until May 31, 2024.