PUTRAJAYA (Feb 19): Practitioners registered under the Traditional and Complementary Medicine (TCM) Act 2016 will be exempted from the 8% service tax, according to the Ministry of Finance (MOF).

In a statement on Monday, the MOF announced that the exemption will apply to alternative medicine services, including Malay traditional medicine, Chinese traditional medicine, Indian traditional medicine, homoeopathy, chiropractic, osteopathy and Islamic medical practices.

“This is a follow-up decision by the MOF, so services provided by health or wellness centres, massage parlours or similar establishments operated by practitioners registered under the TCM Act will not be categorised as taxable services from March 1, 2024,” it said.

“As such, practitioners who are registered under the TCM Act do not need to register with the Royal Malaysian Customs Department, and therefore are not subject to the service tax on TCM services,” it added.

The MOF noted that the exemption was decided after taking into account feedback from various stakeholders in the TCM industry.

Previously, news reports quoted Deputy Finance Minister Lim Hui Ying as saying that alternative medical services under the TCM Act had been subject to the service tax since 2018, but most practitioners were not affected, as they did not meet the RM500,000 turnover threshold for the tax to be imposed.

Nevertheless, the taxation sparked public outcry, and the Malaysian Chinese Association (MCA) had condemned that it would worsen the financial strain on patients who rely on TCM for affordable healthcare.  

In the MOF's statement, Finance Minister II Datuk Seri Amir Hamzah Azizan said the service tax exemption for TCM services is one of the efforts to enhance the well-being of the people, in line with the concept of Malaysia Madani.

“The Madani Economy framework will actively empower the micro, small and medium enterprise (MSME) sector, which employs nearly half of the workforce in Malaysia. The government acknowledges that there is a long way to go to expand the presence of local MSME businesses internationally.

“Therefore, these entrepreneurs rely on domestic demand for the self-sustainability of their businesses at this time, more so for MSMEs that provide services to the Malaysian people," said Amir Hamzah.