11 January 2014

Goods and Services

Tax (GST)
Lee Hooi Seng
Chartered Accountant

11 January 2014

GST - background

To be effective from 1 April 2015 in Malaysia

Also known as Value Added Tax (VAT) in other

countries

160 countries have GST/VAT

Malaysia, Myanmar & Brunei are the only 3

ASEAN countries yet to implement GST/VAT

11 January 2014

GST - background

Initially mentioned in the Budget 15 years ago

as Sales and Service Tax, but never took off

GST was announced in Budget 2005, but has

been put on hold in year 2006

GST is to replace Sales Tax and Service Tax

from the effective date

11 January 2014

Why GST ?

Need to reduce reliance on petroleum revenue

Weaknesses of Sales Tax & Service Tax

GST compliments Income Tax revenue

More stable source of revenue to Government

Self policing and enhance tax compliance

11 January 2014

GST in operation

Consumption tax in the form of value added tax

for each stage of business transactions up to
the retail stage of distribution

GST incurred on inputs (Input Tax) is allowed

as a credit to offset against GST on outputs
(Output Tax) i.e. accrual basis, not receipt basis

11 January 2014

GST in operation 6%
RM 6 GST

Supplier

RM 100 + 6 = 106

RM 3 GST

Manufacturer
RM (9 - 6)
RM 150 + 9 = 159

RM 3 GST

Wholesaler

Kastam Malaysia
RM (12 - 9)

RM 200 + 12 = 212

Retailer

RM 6 GST

RM (18 - 12)
RM 300 + 18 = 318

Consumer

Total GST collected = RM 6 + 3 + 3 + 6 = 18

11 January 2014

GST
Scope

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GST Scope

GST is levied on SUPPLIES (not merely sales)

including gifts, samples, promotion items etc

Certain items are not treated as SUPPLIES e.g.

gifts to the same person in the same year
where costs to the donor is <= RM 500

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GST Scope

GST is charged on
taxable supply of goods & services
made by a taxable person
in the course of furtherance of business
in Malaysia

GST is also charged on imported goods &

services

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GST Scope

GST is also charged on deemed supplies:

- disposal of business assets
- private use of business assets
- imported services
- goods sold in satisfaction of a debt
- gifts costing more than RM 500

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11 January 2014

Supplies
&
Person

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11 January 2014

Supply

GST bill defines a supply as all forms of

supply includes imported services

done for consideration

anything which is not supply of goods is supply

of services

does not include supply of money

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Supply not subject to GST

Cash donation or grants

Compensation or liquidated damages

Disbursements, dividends, loan repayments or

capital injection

Transfer of business as a going concern

Contribution to pension, EPF or Socso

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Meaning of Person

Individual including legal person

Sole proprietor & partnership

Company, club, association, society, cooperative, trade union, non profit body and
unincorporated body

Trust, trustee, executor, administrator & joint

venture

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Meaning of Person

Federal Government, State Government,

Statutory body & local authority

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Place of Supplies

In Malaysia

Goods from an overseas location to another

overseas location (although transit in Malaysia)
= Out of Scope, thus no GST

Supply of services is deemed in Malaysia if

supplier is in Malaysia

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11 January 2014

Time of Supplies

Earlier of the following dates:

1. Goods removed/made available or services
performed
2. Payment received/invoice issued

Tax Invoice is deemed time of supply where it is

issued within 21 days after time of supplies of
item (1) unless payment has been received
before issuing of the tax invoice

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Value of Supply

Consideration in money
Value = Consideration in money - GST portion
GST portion = Consideration x 6/106

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Value of Supply

Consideration not in money = open market

value

Value of imported goods = value for customs

duty + any customs duty paid + any excise duty
paid

Value of imported services = payment paid

Value of supply not for consideration = open

market value of supply

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11 January 2014

Type of Supplies

Standard-rated at 6% (threshold RM 500,000)

- eligible to claim input tax credit on business inputs

Zero-rated supplies at 0%
- eligible to claim input tax credit on business inputs

Exempt supplies
- not eligible to claim input tax credit on business inputs

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11 January 2014

Registration
of GST

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11 January 2014

Registration of GST

Determination of threshold taxable turnover

Includes standard rated supplies, zero rated

supplies and deemed supplies such as private
use etc

Excludes exempt supplies, sales of capital

assets, imported services, out of scope
supplies and supplies to designated areas

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11 January 2014

Registration of GST

Any person who makes taxable supply of goods

and services in Malaysia

Registration is mandatory for businesses with

turnover that has exceeded the prescribed
threshold of RM 500,000

Calculation of turnover for registration is based

on the total value of the taxable supplies for a
rolling 12 month period

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Registration of GST

Based on historical turnover or future turnover

To apply for registration within 28 days from the

end of the relevant month

Effective date of registration will be on the 1st

day of the following month

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Registration of GST

Voluntary registration
business below threshold may apply for
voluntary registration
once registered must remain in the system for
at least 2 years

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Registered Person

Account for GST on taxable supplies made and

received

Submit GST return (GST-03) and pay tax not

later than the last day of the following month
after the taxable period

Issue tax invoice

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Registered Person

Inform Customs of the cessation of business

within 30 days from the date of cessation

Inform Customs of any changes of address,

taxable activity, accounting basis and taxable
period

Keep adequate records of business

transactions relating to GST in English or BM
language for 7 years

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Registration of GST

Other types of registration

Branches or divisional registration
Group registration for group of companies
Registration for non-resident (appointment of
agent)
Joint venture registration for petroleum
exploration activity

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Payment of GST

Monthly if turnover exceeding RM 5 million

Quarterly if turnover RM 5 million or less

A taxable person may apply to be placed in any

other category other than the pre-determined
taxable period

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Payment of GST

GST returns and payments must be submitted

not later than the last day of the month
following the end of the taxable period

Electronic filing is encouraged

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TAX
Invoice

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11 January 2014

Tax Invoice

Types of tax invoice when making taxable

supplies:
- Full tax invoice
- Simplified tax invoice
(amount claimable restricted to RM 20)

Only registered person can issue tax invoice

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Full Tax Invoice

The word Tax Invoice in a prominent place

Supplier name, address and company number

Invoice serial number

Invoice date

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Full Tax Invoice

Name and address of person being supplied

Sufficient description of the transaction

Total amount payable excluding GST, the GST

rate, GST amount and total amount payable
including GST (separately shown)

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Simplified Tax Invoice

Invoice date

Sufficient description of the transaction

Total amount payable including GST

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11 January 2014

Q&A
Lee Hooi Seng
hslee@HSLeePtrs.com
012-339 2925

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11 January 2014

Thank You

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