GST latest update for Manufacturing Sector

20 October 2016

Title : GST Hand Holding Program

Date : 12 October 2016
Venue : New York Hotel ( Johor Bahru, Malaysia)
Speaker : 1) Eiryati Binti Elias (GST Department)
: 2) Raja Normala Binti .I. Ali (Senior Assistant Director of Customs)
Key : RMCD ( Royal Malaysia Custom Department), DG( Director of General)
words

No Item Description
1 Reverse Import services is the services that provides by the supplier that no belong
Charges to Malaysia or carried business outside Malaysia and the services consumed
Mechanism by the company in Malaysia.
(Import RMCD perspective regarding the Import Services items includes:
Services) o Freight Cost provided by the Overseas company
o Consultation and professional services from overseas
o Transportation and logistics services from overseas
o Software services from overseas (Hitachi EDI & Engineering
Software purchase from Singapore)
The services fall in import services categories company required to do the
reverse charges calculation for its GST
2 Importation RMCD firmly emphasize that imported goods by company should be fully
declared in the customs during importation
The company bring the goods by seat, by hand carried and any other
excuse will be treated as Smuggling
If found out any cases, RMCD had the authority to request the company pay
the GST short paid
3 Temporary For goods to be temporary import and reexport will be entitle GST relief
Import based on the Federal Gazette Document (2015).
Different condition will have different Item clause. For instance:
Item 15: Goods imported for repair and subsequently re-
exported
Item 16 B : Goods imported temporarily and subsequently re-
exported
Item 16 C: Goods imported solely for the purpose of propaganda,
research or demonstration
Item 18 Production sample
Item 20 Pallet and empty containers imported and refilling with
the goods and subsequently re-exported
Item 21 Imported filled containers and subsequently re-
exported the empty
In order to entitle GST relief, company had to provided schedule for the
temporary import
FYI, every Item has its own terms and conditions to fulfill. For example:
Item 16 B goods imported temporary and need to re- exported within
three months
4 Exchange The exchange rate to be used in GST report includes:
rate issue o ATS report must in accordance with the custom importation
rate. The GST-03 field 14 &15 should be tally with the ATS
report
o GST input tax figure should follow the supplier tax invoice
exchange rate
o Company account transaction should follow the DG decision
March 2015. JKEM need to follow Bank Negara every month
end rate.
Customs not allowed internal rate for GST reporting. Any foreign currency
in the account transaction should followed the BNM rate
5 Used of Amendment for ATS reporting is not allowed.
ATS ATS is mainly use for new imports not for re used and part reject
Goods reject from overseas supplier, ATS is not allowed
6 ATS renew Company which have IPC and LMW two status can register with either
status. ATS refer to company no status
But the goods and raw material list need to group the IPC and LMW when
apply
7 Criterias Participant must make wholly taxable supply
for ATS Must be a registered user of electronic services
license Must submit monthly GST return
Must make declaration on the importation of goods electronically
Must have goods compliance record as a GST payer
Must have good accounting and internal control system; any other
conditions as may be determined by DG
8 Temporary For goods, temporary export and re-import is entitle to GST relief based on
Export Federal Gazzette document
Item 14 Goods export to designated area for repair and
reprocessing and subsequently returned PCA
Item 16A Goods exported for repair and subsequently re-
imported
Item 16 D Goods re-imported after being exported solely for
purpose of promotion, research or exhibit
Item 16 E Goods re-imported under lease, hire or rental
contract
Item 19 Pallet and empty container exported and
subsequently re-import
9 K2 Form Company should not declare the rework charge, services charge and labor
(Document) charge during exportation. The exportation should mainly the goods and
entitle zero rated
For labor charge, rework charges, and services charges, company is
provided the services in Malaysia and customer is consume the services in
Malaysia. Thus, company required to charge the company with 6% GST in
those charges. No zero rated for those services.
10 LMW (Tax LMW ---------> LMW (purely raw material)
Code RS
treatment) LMW ----------> LMW (Processing & other Services) or IPC
SR
LMW--------> LMW ( not in the list of raw material )
SR
For example:
Selayang----- JKEM
1) Sell the speaker part to JKEM (LMW) is entitle RS (in the list of Raw
Mat)
2) Sell the Solder bar to JKEM (LMW) is subject to SR 6%
*LMW relief is only refer to raw material
*Disposal item is not under the list should be GST
11. De Minis HRA collect RM 50 from foreign worker and deduct it from worker salary
Rule is allowed. However, this supply will not consider as exempt supply if
company fulfill two conditions:
o No exceed RM5000 per months, and
o Total amount less than 5% from total output value
4800
Eg: 150000+4800 100 % = 3.1 %
*

12 Time of Real Case example:

Supply o Company ask vendor to install software at Oct 2016 and payment at
Nov 2016. The company received invoice at Nov 2016.
o Custom stated that this transaction should declare in Oct 2016.

13 Gift Rule More than RM 500 with accumulate basic to a same person, company
required to do the deemed supply mechanism.
Gift rule is not only gift to employee but also free disposal item to other
people. The value will be based on the market value
Goods or assets put for private used need to account for deemed supply as
well. For instance: company car borrows to the employee family.

14 Proforma According to the RMCD, Pro forma Tax invoice not regarded as Tax
Tax Invoice Invoice.
Company could only claim the input tax when there is proper Tax Invoice.
Real Case example:
If a company issue pro forma invoice in July16 and the services also
conducted in July16 but the tax invoice issue on Aug16. Company report
the output tax based on Aug16 tax invoice.

This transaction will be treated as against the rule and regulation of GST. If
the services conducted in July16, company should issue the tax invoice and
report on July16.
15 Tax Invoice If company entitle any relief from RMCD/ Finance Minister/ DG decision,
the tax invoice need to include the related clause and sentence.
Allowed to use different code to separate the other income and sales
16 CN/DN According to the RMCD:
 o Credit note is issued when the amount previously invoice is reduced
Part reject/ Goods return/Price reduces/ Cancel transaction
Debit note is issued when the amount previously invoice is increased
for the same supply
o Less quantity/ Price variance
17 Filling Preserved for 7 years
record National or English
Kept in Malaysia
18 Bad Debt In order to take in the customer into bad debt status. Company should
ensure it has put enough afford to chase the payment. For example, by
giving the remind letter and sue the customer.
Without showing the afford for asking payment, company are not allowed
to claimed the bad debt input tax
19 Dividend to Based on custom explanation, if MNC company or group company
company memorandum showed investment holding, the dividend paid to the
group headquarter will be consider as exempt supply rather than incidental
supplies.
If company which having ATS status and fall in the investment holding
company categories, custom will cancel the ATS status as company
provide mix supplied which is against the ATS criteria.
20 Exportation Invoice must attach with related document such as packing list and K2
Tax invoice form.
filing
21 GAF o According to the RMCD, Company which had ATS but do the GST
reporting in excel without accounting system and unable to generate
GAF file. RMCE will treat the company as GST short paid company
and they have the right to stop the ATS license