GOODS AND SERVICES TAX(GST)

*1.11.21.31.4Why GST?What Is GST?Basic Elements Of GSTMalaysias GST Model Agenda1SALIENT FEATURES OF GST

*2.42.52.6Non Allowable Input Tax (Blocked Input Tax)

Apportionment Rules

De Minimis Limit

Agenda2.12.22.3What Is Input TaxAllowable Input TaxCriteria To Claim Input Tax2INPUT TAX

*3.43.53.6Taxable Period

Submission Of GST Returns

Record Keeping

Agenda3.13.23.3Charging Output TaxTax Invoice, Credit Note & Debit NoteGST Adjustments3ACCOUNTING FOR TAX

*4.14.2GST treatment on ManufacturingMatters related to ManufacturingAgenda4MANUFACTURING

*5.45.55.6Registration

Special Refund

Business Preparation

Agenda5.15.25.3Acts RepealedSupplies Spanning GST Non Reviewable Contract5TRANSITIONAL ISSUES

1. SALIENT FEATURES OF GST

1.1*

*19725%, 10% & specificSelected goods imported or manufactured locallyRM100,000Service TaxSales Tax1975Prescribed services0 RM3 million6% & specificManufacturerWholesalerRetailerConsumerServices providerConsumerWhy GST Current consumption taxes Element of sales tax embedded in the price paid by consumer

Year of implementation

Scope of tax

Threshold

Rates

*Examples Goods subject to 5% Sales Tax 5%

*Examples Goods subject to 10% Sales Tax

*Security ServicesParking LotsRestaurant Professional ServicesCar Service CentresHotel6%InsuranceCurrent Consumption Tax - Service Tax

Tax Embedded In Goods ExportedTax on Tax (cascading, double taxation, compounding effect)

Transfer Pricing**WHY GST?Weaknesses SSTGST - More Efficiency & Effectiveness Self PolicingEnhance Tax ComplianceLess BureaucracyGovernment RevenueGovernment is too dependent on income tax Government is too dependent on petroleum revenueUnderground economyHidden/shadow sectors/industries may be encouraged to be in the GST system 56.4%(2012)32.6%(2012)*

*ManufacturerWholesalerRetailerConsumerCost RM 100 + 10% tax (RM10) + 20% Margin (RM 22)RM110Govt collects:Tax RM10TaxNilRM132+ 30% Margin (RM 39.60)RM171.60Final price paid by ConsumerTaxNilRM10.00Total tax collected by GovtRM 5.60Total tax loss/ uncollectedRM10 x 20%= RM2.00(10 + 2) x 30%= RM3.60RM10.00*Tax ballooned to RM15.60 (10 + 2 + 3.60)SST is ineffective Compounding effect Assume SST at 10%

*ManufacturerWholesalerRetailerConsumerCost RM 100 + 20% Margin on RM100 w/oTax(RM 20)RM100Govt collects:Tax RM 6TaxRM 1.20RM120+ 30% Margin on RM120 w/o Tax(RM 36)RM165.36TaxRM2.16+ 6% tax on RM20(RM 1.20)+ 6% tax (RM6) RM6RM7.20+ 6% tax on RM36(RM 2.16)RM156RM9.36Final price paid by ConsumerRM9.36RM 0 (Zero)Total tax loss/ uncollectedTotal GST collected GST is an effective tax because it is captured at every stage (GST at 6%)

1.2*

Basic principles of GSTA consumption tax in the form of value added taxeach stage of business transaction up to the retail stage of distributionAlso known as Value Added Tax (VAT)GST incurred on inputs is allowed as a credit to the registrantoffset against output taxBusinessINPUTOUTPUTRaw materials, rents, electricity, furniture, professional services etc.GoodsServicesClaimed input tax GST on inputs= Input taxGST on output= Output taxWhat is GST?

*What is GST?

TYPES OF SUPPLYOUTPUT TAXINPUT TAXStandard rated6%ClaimableZero rated0%ClaimableExemptNo GST chargedNon claimable

* GST payable = RM480-RM300 (net GST) = RM180

GST at 6%Expenses/purchasesRM5000.00GST 6%=RM300

Garment ManufacturerSales (RM8,000)GST 6%=RM480incurredchargedWhat is GST?

What is GST?* GST payable = RM240-RM120 (net GST) = RM120

*GST at 6%Expenses/purchasesRM2000.00GST 6%=RM120Service ProviderServices performed

(RM4,000)GST 6%=RM240chargedincurred

*ManufacturerWholesalerRetailerConsumerHow GST Works? Standard - rated

*How GST Works? Standard - ratedDelivery or Supply ChainPurchase cost : RM100GST* 6% : RM6Purchase Price : RM106*Note : claim input taxSelling price : RM125GST* 6% : RM7.50Total selling price: RM132.50Added value : RM25(Add GST : RM1.50)

WholesalerPrice: RM10GST: RM 0.60Tax remitted to Government Output tax = RM 0.60Total amount remitted to Customs = RM 3.60RetailerConsumerPrice: RM50GST: RM 3.00Price: RM60GST: RM 3.60Output tax = RM 3.00Input tax = RM 0.60RM 2.40 Output tax =RM 3.60Input tax =RM 3.00RM 0.60

GST @ 6%Consumer pays 6%GST onlyManufacturer GST 6%How GST Works? Standard Rated RM 3.60

*ManufacturerWholesalerRetailerConsumerHow GST Works? Zero - rated

*How GST Works? Zero - ratedDelivery or Supply ChainPurchase cost : RM100GST* 0%Purchase Price : RM100*Note : claim input taxSelling price : RM125GST* 0% : RM0Total selling price: RM125Added value : RM25

*Medical supplierPrivate hospitalConsumerHow GST works? Exempt

*How GST Works?

Standard rated supplyConsumer pays 0% GST ManufacturerClaim back GSTWholesaler -Claim back GSTRetailer -Claim back GSTManufacturerClaim back GSTPrivate HospitalCannot claim back GST

1.3*

*Sales Tax & Service Tax (SST)Goods and Services Tax (GST)5%, 6%, 10% & specific rateVarious thresholdRate = 6 %Threshold = RM500,000To replace current tax systemGST is charged on goods and services that are supplied in Malaysiaimported into Malaysia GST model

*Standard Rate GST model Standard rated supply

*300 UNITS A MONTHWater for Domestic UsersEXPORTED GOODS AND SERVICES GST model Zero rated supplyInfant Milk

* GST GST Model Exempt SupplyHealth

* GST model Supply by Government

Out of ScopeAll supplies by Federal & State governmentSupplies made in the regulatory and enforcement (R&E) functions

eg. Assessment rate collection, issuance of licenses, penalty

Subject to GSTSupplies that have been directed by Minister in the GST (Government Taxable Supply) Order

eg. Supply made by RTM, Prison DepartmentNon R&E functions

ie. Business activities such as rental facilitiesAcquisitionsNeed to pay GST on their acquisitionsRelief on all goods excluding petroleum & imported motor carsNeed to pay GST on their acquisitionsNeed to register for GST and input tax claimable

Federal & State GovernmentLocal Authority & Statutory Body

*

Approved Trader Scheme (ATS)facility given to major exporters where GST on imports is suspended

Approved Toll Manufacturer Scheme (ATMS)facility given to local toll manufacturer to disregard tax on value added charges to overseas client

Approved Jewellers Scheme (AJS)GST suspended on gold and precious metal acquired by jewellery manufacturers

Flat Rate Scheme to allow farmers to collect additional charges at specific rate from the buyersSpecial Schemes To provide cash flow relief to businesses

*To provide cash flow relief

Margin Scheme second hand car dealers to account GST on the margin

Warehousing Scheme GST suspended in public and private warehouseTo promote tourism Tourist Refund Schemetourists allowed to claim GST paid on purchasesDesignated Areano GST in Labuan, Langkawi & Tioman

Special Schemes

1.4*

*

GST is charged on the taxable supply of goods and services made by a taxable personin the course or furtherance of businessin MalaysiaGST is charged on the imported goods/services

BASIC ELEMENTS OF GST

*Basic Elements of GSTScope of taxSupplyImportationTaxable supplyTaxable personFor the purpose of businessMade in MalaysiaNot Subject to GSTSubject to GST

*Supplies not subject to GST

cash donation or grants where a person does not get benefitscompensation or liquidated damagesdisbursements, dividends, loan repayments or capital injectiontransfer of business as a going concerncontribution to pension, provident or social security fundBasic Elements of GST

* Importationimported goods (supply outside Malaysia) GST is charged at point of import (entry point)imported services for business purpose GST is charged by reverse charge mechanism (deemed as self supply)

Recipient of services is treated to have made the supply to himself and accounts for the output tax Basic Elements of GST

*General meaningto furnish, serve or provide somethingin the case of goods the transfer of title or ownership, outright cash or credit sale, hire purchase etcin the case of services the provision of services Generally, a transaction is a supply if :someone does something or agrees to do something in return for a consideration andinvolves a supplier and a receiveranything done for considerationsale, barter, exchange, license, rental, lease, right to use, gifts or dispositionlinked to the supplyeverything received in return for the supply of goods or services (in monetary or non-monetary terms Supply

*GST charged ontaxable supplies (sales of goods / services)deemed supplies for examples:disposal of business assetsprivate use of business assetPayment not paid to taxable person for the purchase made after 6 monthsgifts costing more than RM 500goods sold in satisfaction of a debtimported servicessupply of service with no consideration to connected person

Supply

* Consideration = any payment made or to be made in money or otherwise = act of forbearance, whether or not voluntary In respect of the supply of goods or services

CONSIDERATIONConsideration (Section 2 GST Act 2014)any payment made or to be made, whether in money or otherwise, or any act or forbearance, whether or not voluntary, in respect of, in response to, or for the inducement of, the supply of goods or services, whether by the person or by any other person: Provided that a deposit, whether refundable or not, given in respect of the supply of goods or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply

*TYPES OF SUPPLY

*Types of Supply

*Rules for supply of goods:Goods treated as supplied in Malaysiaremoval from a place in Malaysia to another place in Malaysia (local supply)removal from a place in Malaysia to a place outside Malaysia (export)Place of supplyTo determine whether a supply is made in Malaysia or notdifferent rules for supply of goods and supply of servicesPLACE OF SUPPLY

*Place of supply of goodsGoods treated as supplied outside Malaysiaremoval from a place outside Malaysia to a place inside Malaysia (import)removal from a place outside Malaysia to another place outside Malaysia (out of scope)

*Place of supply of services

SUPPLIER OF SERVICES BELONGS ?MALAYSIAOTHER COUNTRYBusiness / Fixed EstablishmentYESNOSupplier belongs in MalaysiaUsual place of residenceYESNOSupplier belongs in MalaysiaBusiness / Fixed EstablishmentYESYESSupplier belongs in Malaysia if the supply of the business is most directly concerned with Malaysia

*Imported services

Company A(Malaysia)Company B(UK)Value of Service= RM10,000

Treat as normal practiceValue ofService= RM10,0006% GST= RM 600Reverse Charge MechanismGST-03OUTPUT TAX = RM600INPUT TAX = RM600 RM 0

* TIME OF SUPPLYTo determine when tax is due and payable on a supplyGeneral time of supply rulesbasic tax point for supply of goodsthe time when goods are removed the supplier sends the goods to the customerthe customer collects the goods from the supplier

the time when goods are made availablee.g. if the supplier is assembling something on the customer's premises

basic tax point for supply of services

the time when the services are performed

*Time of Supply

Events before basic tax pointTime of Supply when the payment is received or tax invoice is issued to the extent covered by the invoice or payment, whichever is the earlier

21 days rule

if tax invoice is issued within 21 days after the basic tax point, then time of supply is the time of the tax invoice

Power of the DG may alter the time at which supplies are made

Notes: It is an offence under GST Act 2014 if tax invoice is not issued within 21 days after the supply has taken place

*Tax invoice issuedGoods removed or Services performed1 July1 Aug4 July24 JulyTax invoice issued within 21 daysActual Time of supply24.7.14Time of Supply

*Time of paymentTax invoice issuedGoods removed or Services performed1 June1 July1 Aug14 June10 July24 JuneActual Time of supplyTime of Supply

*Time of Supply30 MayGoods removed(basic tax point)3 JunPayment received6 JuneTax invoice issuedScenario 1within 21 days Time of supply is on 6 June even though payment is received before the date of tax invoice

*Time of Supply30 MayGoods removed(basic tax point)29 JunePayment received26 JuneTax invoice issuedScenario 2Time of supply is on 30 Maybasic tax point > 21 days

*Basic Time of supply?=> When consignor received the statement of sale from consignee (date of statement).Actual Time of Supply?=> Date of tax invoice issued by consignor to consigneeConsignorcustomerConsignee12CONSIGNMENT SALES Not a supplyConcept12 monthsTime of Supply Specific Rules

*

Consignor has to account for GST, when it becomes certain that a supply has taken place, or {the time when the consignor receives a statement of sales from the consignee that the goods had been sold} 12 months after the removal of the goods, whichever is the earlier

If a tax invoice was issued within 21 days of the date of the consignor receives the statement of sales or after twelve months the goods were sent, then the time of supply is the date of the tax invoice. Time of supply Specific Rules

*Value for GST :Value of supply (consideration in money) Value = consideration GST portionValue of supply (consideration not in money term)Value = open market valueValue of imported goodsValue = value for customs duty + amount of customs duty paid/to be paid + amount of excise duty paid/to be paid ( if any )Value of imported servicesValue = payment made ContVALUE OF SUPPLY

Value of Supply Value of supply (consideration in money) Value = consideration GST portionExample: Company A receives payment for printer from Company B = RM 2,600. GST rate is 6%GST = Consideration x Tax FractionGST = RM 2600 X 106 6 = RM 147.17

Value of supply = Consideration GST = RM2600 - RM147.17 = RM2452.83

*

Value of SupplyValue of supply (consideration not in money term)Value = open market value (OMV) of the consideration OMV refer to theThird Schedule of GST Act 2014

Example 1Ali who is a mechanic buys a second hand table from Ahmad. Ali does not pay in money but agrees to repair Ahmads car. If Ahmad is a registered person, he has to account GST for the disposal of second hand table with the value calculated using the open market value of Alis repair service using.*

Value of SupplyValue of supply (consideration not in money term)Example 2Ali buys an old forklift from Ahmad. He pays RM3000 in cash and agrees to repair Ahmads car as full settlement. If Ahmad is a registered person, he has to account for the disposal of the forklift on the value of RM3000 cash and the open market value of Alis repair service.Value of imported servicesValue = payment made

*

Value of SupplyValue of imported goodsValue = value for customs duty + any customsduty paid + any excise duty paid

ExampleAhmad imported fabric from Japan for a customs value of RM4000. The rate for import duty is 30%. The value on which GST is chargeable is as follows:- Value = RM4000Import duty 30%= (RM4000 x 30%)= RM1200Total value for GST= (RM4000 + RM1200)= RM5200GST (6% X RM5200)= RM312 *

- Multistage tax on domestic consumption- GST satu sistem percukaian yg adil..Siapa yg berbelanja lebih dia bayar tax lebih..Siapa yg kurang belanja, terutama low middle income groupGolongan low income group, bayar tax kurangHasil Kerajaan skrg ini diperolehi dari income tax lebih kurang 56%, customs hanya contribute 17% of the whole cake of revenue collected by governmentKerajaan bergantung kepada direct tax & Petroleum Income TaxIncome tax Investor

Very beautiful model GST yg kita develop. Klau lihat negara New Zealand. Semua kena cukai termasuk service government.. Klau di Singapore semua kena cukai kecuali financial services dan sale residental property.. But Malaysia we have own model GST, very beautiful model to presented our rakyat.When government get more incomerakyat get more benefit Dari Anda kepada Anda.

*Barangan bercukai jualan 5% seperti :Tea 3 dalam 1, Nescafe 3 dalam 1, Serbuk kari, serbuk perasa..Makanan & minuman yang diproses seperti mentega, mi segera, biskut, kacang tanah..Manakala barangan bercukai jualan 10% adalah :Pakaian baju, seluar, kasut, beg dll.minyak pelincir.Kenderaan seperti kereta, bas, lori dan alat gantinya.Perabut rumah set sofa, kerusi, meja, almari.Kelengkapan dapur seperti pinggan mangkuk, periuk dll.

Cascading Effect & Double Taxation Tax on TaxContoh kita pergi makan A&W, KFC, McD, Kenny Rodgers dan sebagainyaKita bayar RM100, jadi 6% CP sebanyak RM6.. But we are really paid tax 6%.......Restoran perlukan insurance premis 6%, pinggan mangkuk 10%, air berkarbonat 10%, uniform pekerja 10%, telco 6%, kerusi meja 10%Semua ini,, element2 tax mereka letak dalam costing product mereka Siapa yang tanggung..element2 tax ini.. Kita as consumer yang tanggung..Sebenarnya bukan 6% ..tetapi lebih dari itu

#GST lebih efektif & efisien Less BirokrasiKlau bawah CJ5- pelesen bawah ACJ perlu mohon CJ5 perlu dapatkan kelulusan daripada pegawai kastam Business Friendly (Mesra Perniagaan) - Reduce Business Cost

#Hasil NegaraCukai GST dipungut based on consumptionTidak dipengaruhi oleh faktor luaran spt kelembapan ekonomiEkonomi Down Company Profit akan Down Collection Income Tax Down

Petroleum not forever forever will be there (depleting)

***Consumer boleh claim x?- Ini consumption tax, klau boleh claim kerajaan boleh dapat apa? Kann*****Kajian ke atas model undang2 New Zealand, UK, Afrika Selatan, Kanada, Singapura, Thailand, Australia dan Indonesia.

Kita juga merangka model GST ini bersama2 dengan industri dan persatuan-persatuan yg ada.Maklumkan bahawa barangan berkadar standard adalah barangan yang bukan dibeli setiap hari tetapi sekali sekala sahaja. (walaupun rokok dibeli hari-hari tetapi dikenakan kadar standard kerana kerajaan tidak menggalakkan rakyat untuk merokok).Pihak kerajaan telah memperkenalkan CBP berkadar SIFAR untuk barangan seperti :

ayam, itik & telur.binatang ternakan lembu, kambing dll.barang makanan beras, tepung, gula, garam, minyak masak.hasil laut ikan, udang, sotong dll.produk pertanian sayuran segar dll.

Manakala perkhidmatan yang berkadar sifar pula :bekalan elektrik bagi 200 unit pertama sebulan untuk pengguna domestik.

Akhir sekali untuk Barangan & perkhidmatan yang dieksport ke luar negara.

Mengapa kerajaan menetapkan kadar sifar keatas barang-barang berkenaan? Ianya bertujuan untuk mengurangkan bebanan ke atas perbelanjaan golongan yang berpendapatan rendah.

Nyatakan senarai penuh bekalan dikecualikan akan ditetapkan oleh Menteri Kewangan dalam warta.

Definisi Supply Meliputi semua bentuk pembekalan yang melibatkan barang dan perkhidmatan yang dibekalkan untuk mendapat balasan. Contoh pembekalan termasuk jualan, sistem barter, sewa, pajakan. Balasan yang diterima boleh dalam bentuk wang atau dalam bentuk bukan wang atau kedua-duanya.

Supply of goods melibatkan pemindahan hak pemilikan barang daripada seseorang kepada seseorang yang lain. Goods means apa-apa jenis harta alih dan harta tidak alih.

Sebarang aktiviti yang bukan supply of goods merupakan supply of services.TOGC pemindahan atau penjualan bersama dengan aset perniagaanCnth: tempahan dr pelanggan indonesia ke compny jepun.. Compny jepun suruh pejabat serantaunya di Malaysia membekalkan perkhidmatan. Pembekal perkhidmatan berada di Mlaysia dan bukan di Jepun.

Part payment supply of goods belum berlaku** *Computation of threshold based on value of supply not consideration received*Imported services is not tax inclusive*Imported services is not tax inclusive*Imported services is not tax inclusive