Service Tax - 12 Month Deemed Paid Rule ( Credit Note)

This article is for:

• ABSS Premier v23.1
• ABSS Accounting v28.1

Based on Section 11 Service tax (Amendment) ACT 2019 (Royal Malaysian Customs Department), any taxable service provided by the registered person is not received from the customer within a period of twelve months from the date the taxable service was provided, the service tax shall be due on the day following that period of twelve months. 

How to handle 12 Month Deemed Paid Rule in ABSS  

Scenario 1 : User does not perform financial year end 

1) Record Sales Invoice

To record the sales invoice, go to Sales > Enter Sales > and enter the service sale amount with S06 tax code. ( Example as per the image below) 

2) Service Tax Declaration - after 12 months

After 12 months from the invoice date, the user needs to declare service tax even though the customer does not pay to them. User needs to record the payment after 12 months from Invoice date/ date of service was provided. To record the payment, kindly go to Received payment > select Provision of doubtful debt account ( Asset) account. ( Refer the image below).

To record the regular payment received from the customer, we must select a Bank account. However, for this case, since the user does not receive any payment from the customer, the user needs to choose Prov for Doubtful Debts account. Once the user records the payment, the Service Tax amount will appear in field 11c. ( SST 02 Report)

3) Record back the invoice

Please note that the user does not receive any payment from the customer yet. So they need to record back the invoice using the same Invoice date. This time, the user needs to using Prov'n for Doubtful Debts account. Kindly record the invoice as per the image below. 

4)  Record Credit Note

Let say after we paid the service tax to Kastam, our customer not able to pay the outstanding invoice due to certain circumstances. So, you need to record the Credit note to write off the bad debt.

To record the credit note, enter the bad debt amount inclusive tax ( tick tax inclusive) and select the bad debt account under expenses.  ( refer the image below). 

 5)  Pay refund

 Go to sales > enter sales > returns & Credits > select the credit note > pay refund > select prov of bad debt account under asset.

 

6) Generate SST 02 Report  - Credit note Service tax amount will appear in field 13a

7) Close the outstanding Invoice

Please remember your invoice is still outstanding. So, the user needs to close the outstanding invoice. To do that, kindly go to the received payment > and received the payment using prov of the bad debt account. ( as per the image below)