The scope of the tax exemption for logistics services initially covered services for direct export goods, transhipments, transit activities, door-to-door deliveries, food and beverage deliveries through e-commerce platforms, and B2B transactions.

The finance ministry said Putrajaya has since agreed to widen the scope of the exemption for B2B logistics services to “include the provision of services under the same item”.

“This is to reduce incidents of cascading effects from the imposition of tax-on-tax for several layers of the logistics supply chain,” it said in a statement.

“For example, now, a freight delivery service provider does not only get an exemption for freight services but also for other services, such as warehousing, ports, shipping and cold chain facilities that fall under the same category as the freight service provider.”

The ministry said it will continue to hold engagements with industry players, especially those in the logistics sector, to finalise amendments to the guidelines for the tax scheme.

It also said the tax would only be enforced from April 1 to give newly registered logistics service providers time to amend their computing systems in line with the service tax.

“The finance ministry hopes that this special treatment can continue to support the growth of the nation’s logistics sector while ensuring its users, including traders, would not be burdened,” it said.

Previously, the Federation of Malaysian Manufacturers urged Putrajaya to defer the 6% tax on logistics services, warning of a rise in cost of goods sold locally.