Download - Gst framework

Preparing Business For The Transition Towards GST

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GST UNITROYAL MALAYSIAN CUSTOMS DEPARTMENT

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Briefing Agenda______________________________________________________

1. Supplies Spanning GST 2. Non Reviewable Contract 3. Special Refund 4. Government Preparation 5. Business Preparation

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Supplies Spanning GST

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Supplies Spanning GST_______________________________________________________________

Meaning of supply spanning GST• Payment or invoice before appointed date(AD) and supply takes place on and

after appointed date e.g. sale of goods, airline tickets.

General Rule• Any supply before appointed date - not subject to GST• Any supply on or after appointed date - subject to GST

Exception to the general rule• Supply of warranty• Provision of services where service tax has been charged• Provision of goods where sales tax has been charged• Non reviewable contracts

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Supplies Spanning GST______________________________________________________

BEFORE GST ON OR AFTER GST

GST IMPLICATION

Goods Supplied(removed/made available)

Invoice issued or payment received

Not subject to GST but subject to SALES TAX

Invoice issued or payment received

Supply of goods subjects to sales tax

Not subject to GST but subject to SALES TAX

Supply of non taxable goods under Sales Tax Act 1972

Value of supply deemed inclusive of GST and account in the 1st taxable period after the appointed date

Goods imported Release from customs control

Subject to GST and date of importation is when goods released from customs control

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Non Reviewable Contract

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Non Reviewable Contract____________________________________________________

Non reviewable contract Written contract with no provision to review consideration for the

supply until a review opportunity arises.

And Contract entered into not less than 2 years before GST

implementation date

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Non Reviewable Contract ____________________________________________________

Meaning of review opportunity Opportunity for supplier either by himself or with agreement

to- Change the consideration because of the imposition

of GST Conduct a review after AD, renegotiation or alteration

of consideration, or Conduct a review before AD, renegotiation or

alteration of the consideration

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Non Reviewable Contract ____________________________________________________

Zero-rated supply for 5 years after appointed date or when a review opportunity arises whichever us the earlier if –

Both supplier and recipient are registered persons;

Supply is a taxable supply; and

The recipient of the supply is making wholly taxable supply

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Special Refund

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Special Refund ____________________________________________________

Entitled to special refund of sales tax if – Claimant is registered person(mandatory registrant)

Holds goods on appointed date for making taxable supply

Goods are subject to sales tax

Holds relevant invoices or import document proving sales tax has been paid

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Special Refund____________________________________________________

Goods not eligible for special refund Capital goods e.g. building and land

Goods used partially or incorporated into other goods e.g. raw materials, work in progress

Goods for hire e.g. cars, generators

Goods not for business e.g. personal use

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Special Refund____________________________________________________

Goods not for sale or exchange e.g. containers, pellets, stationeries, moulds, manufacturing aids

Goods entitled to claim for drawback when exported

Good allowed sales tax deduction under Section 13A Sales Tax Act 1972( credit system) – 8% Tax Credit for Vendors

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Special Refund____________________________________________________

Manner to claim special To claim within 6months from appointed date, 1st April 2015

For special refund < RM 10,000 requires audit certificate signed by a chartered accountant

For special refund requires audit certificate signed by an approved company auditor

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Special Refund_______________________________________________________

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Required to fill a claim form

To be refunded in 8 equal instalments over a period of 2 years

To account as output tax if special refund is claimed and goods subsequently returned to supplier

GovernmentPreparation

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Government Preparation____________________________________________________

Areas requiring attention

Getting the tax right Getting the tax accepted Getting the people ready Getting the systems ready

Requires joint effort of government and business community

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Getting the tax right

• Right model To be clear what to tax Zero rate basic food and exported goods and services Exempt public transport, residential property, education,

health, highway toll and financial services

• Legislations and procedures

Clear, simple and ease of administration GST Act, 3 Regulations and 8 Orders GST guides GST rulings 20

Government Preparation____________________________________________________Subsidiary legislations:

1. GST(General) Regulations

2. GST(Tribunal) Regulations

3. GST(Advance Ruling) Regulations

4. GST(Exempt Supplies) Order

5. GST(Zero Rate Supplies) Order

6. GST(Rate of Tax) Order

7. GST(Designated Area) Order

8. GST(Liability to be Registered) Order

9. GST(Government Taxable Supplies) Order

10. GST(Relief) Order

11. GST(Free Commercial Zone) Order

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Getting the tax accepted Outreach program

1. Awareness• Consumer• Business• Government

2. Training organized by:• MOF, Customs• Business chambers,

professional bodies, FMM, SME Corp, NGOs, association etc 2

2


Getting the people ready

• Organization structure• Manpower

Recruitment Training

• Taxpayer service Call centre: 1300-88-8500, 03,7806 7200 GST portal

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http://www.gst.customs.gov.my

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Getting the system ready1) Core module

Registration Tax return Payment Refund

2) Infrastructure

3) Integration ( Customs, MOF, JPN, SSM and banks)

4) Training26

Business Preparation

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GST Implementation Approach____________________________________________________

To implement a GST compliant system

GSTProject Team

1st phase

Develop implementation

plan

2nd phase

Implementation and execute

3rd phase

Post implementati

on

Tax regulatory compliance

Documentation and system

Legal and transitiona

l issues

Education and

training

Vendor and supplier

communication

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Business Preparation____________________________________________________

GST Implication on Registration Pre-registration

• Registration exercise begins 6 months before GST implementation date ( 1 October 2014)

• Mandatory registration To register 3 months before GST implementations date (1

January 2015)

Voluntary registration( remain registered not less than 2 years) Compliance costs Vs input tax credit claims Supplier and customer profile

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Business Preparation_____________________________________________________

GST Implication on Prices Identify existing supplier

• Talk to small suppliers to get them registered • Review procurement policy to avoid tax cascading• Negotiate prices with suppliers to pass on saving

Review sales price Price inclusive or exclusive of GST Absorption of GST Price control and anti Profiteering Act 2011

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GST Implication on Stock Management Monitor business stocks

Purchase strikes and lulls Procurement policy Registration and deregistration

Special refund• Physical stock take• Documents to support refund• Audit certificate

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GST Implication on Cash Flow Need to analyze cash flow impact

• Cash recover from customer before GST is due

• Assess the need to provide for one time fund to cater for GST payment upfront

Review credit terms to customers

Review requirement to apply for special schemes(e.g. Approved Trader Scheme) 32


GST Implication on Invoicing Identify whether standard rate, zero rate or exempt supply

Issuance of full and simplified tax invoice

Not allowed to issue tax invoice for imported services and second-hand goods under margin scheme

21-day rule

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GST Implication on Output Tax Gifts > RM500 subject to GST

Commercial samples in a form not ordinarily available for sale to the public not subject to GST

Deemed supply e.g. private use and disposal of business assets subject to GST

Supplies to connected persons

Business assets held on last day of registration

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GST Implication on Input Tax Input tax credit

• Apportionment of input tax for mixed supplied

Blocked inputs not claimable( e.g. passenger car, entertainment expenses to persons other than employees or existing customers)

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GST Implication on Contracts Avoid long term contract without legal review Zero-rated supply for 5 years for non reviewable contract

GST Implication on Human Resource Upgrade staff understanding of GST Avoid unnecessary mistakes False information may open to audit case

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Business Preparation_________________________________________GST Implication on System Review system and processes

Perform complete mapping of transactions to identify required changes

Online application and submission to tax agency

Computerised system• Ready-made software• Upgrading present system

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Wish List_____________________________________________________

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Both business community and Government are well-

prepared to implement GST

Implementation problems are minimizedl

Minimum impact on prices of goods and services

Public accept GST implementation

Thank you

“PAM does not take responsibility on the accuracy of the above information. The information aforementioned is based on PAM’s

internal research made available from accounting books to the best of PAM’s knowledge only for your easy reference. Members are

encourage to seek further advice from a qualified auditor/accountant.

Members who wish to rely on the above information have been informed of the risks associated with relying on such information.”

Download - Gst framework

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