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Malaysian Government Reverses Course on Taxing Traditional Medicine

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After affirming that the new 8% service tax would apply to traditional medicine providers, the government had a change of heart, now saying that services delivered by such practitioners will be tax-exempt.

Traditional and complementary medicine (TCM) practitioners registered under the T&CM Act 2016 [Act 775] will receive exemption from the 8% service tax, as announced by the Ministry of Finance (MoF).

Finance Minister II Datuk Seri Amir Hamzah Azizan, in a special interview with Bernama, stated, “As long as the TCM practitioners are registered with the Act under the Health Ministry, they will be exempted from the service tax that will come into effect on March 1, 2024.”

This exemption applies to various TCM services, including Malay Traditional Medicine, Chinese Traditional Medicine, Indian Traditional Medicine, Homeopathy, Chiropractic, Osteopathy, and Islamic Medical Practices.

Additionally, TCM practitioners registered under Act 775 are not required to register with the Royal Malaysian Customs Department and are not obligated to impose the service tax on their services.

“The Finance Ministry has also agreed that this decision applies to services provided by medical or wellness centres, massage parlours or such other places managed by TCM practitioners registered with Act 775 for the aforementioned services for the period before March 1, 2024,” clarified Amir Hamzah.

Amir Hamzah, Ministry of Finance | Image Credit: Bernama via MoF

This decision reflects the government’s commitment to ensuring that services provided by TCM practitioners are not categorized as taxable services, effective March 1, 2024. It also takes into account feedback from engagement sessions with stakeholders of the TCM industry.

According to Amir Hamzah, the service tax exemption for TCM services aligns with efforts to enhance the well-being of the people, as emphasized in the Malaysia MADANI concept and incorporated in the MADANI Economy Framework: Empowering the People.

“The decision, endorsed by the Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, aims to improve the comfort and well-being of the people,” stated Amir Hamzah. He also highlighted the framework’s focus on aggressively empowering the Micro, Small and Medium Enterprises (MSMEs) sector, which employs almost half of the workforce in Malaysia.

While acknowledging the importance of expanding local MSMEs to the international arena, Amir Hamzah emphasized their current dependence on domestic demand for business survival, especially for MSMEs providing services to Malaysian citizens.

Source: Malaysia Ministry of Finance


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