Gst framework

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<ul><li> 1. Preparing Business For The TransitionTowards GST___________________________________________GST UNITROYAL MALAYSIANCUSTOMSDEPARTMENT1</li></ul> <p> 2. Briefing Agenda______________________________________________________1. Supplies Spanning GST2. Non Reviewable Contract3. Special Refund4. Government Preparation5. Business Preparation2 3. SuppliesSpanningGST3 4. Supplies Spanning GST_______________________________________________________________Meaning of supply spanning GST Payment or invoice before appointed date(AD) and supply takes placeon 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 GSTException 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 contracts4 5. Supplies Spanning GST______________________________________________________BEFORE GST ON OR AFTERGSTGSTIMPLICATIONGoods Supplied(removed/made available)Invoice issued or paymentreceivedNot subject to GST butsubject to SALES TAXInvoice issued or paymentreceivedSupply of goods subjectsto sales taxNot subject to GST butsubject to SALES TAXSupply of non taxablegoods under Sales Tax Act1972Value of supply deemedinclusive of GST andaccount in the 1st taxableperiod after the appointeddateGoods imported Release from customscontrolSubject to GST and date ofimportation is whengoods released fromcustoms control5 6. NonReviewableContract6 7. Non Reviewable Contract____________________________________________________Non reviewable contract Written contract with no provision to review consideration for thesupply until a review opportunity arises.And Contract entered into not less than 2 years before GSTimplementation date7 8. Non Reviewable Contract____________________________________________________Meaning of review opportunity Opportunity for supplier either by himself or with agreementto- Change the consideration because of the imposition ofGST Conduct a review after AD, renegotiation or alterationof consideration, or Conduct a review before AD, renegotiation oralteration of the consideration8 9. Non Reviewable Contract____________________________________________________ Zero-rated supply for 5 years after appointed date or when areview 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 taxablesupply9 10. SpecialRefund10 11. 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 taxhas been paid11 12. 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 use12 13. 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 TaxAct 1972( credit system) 8% Tax Credit for Vendors13 14. Special Refund____________________________________________________Manner to claim special To claim within 6months from appointed date, 1st April 2015 For special refund &lt; RM 10,000 requires audit certificate signed by achartered accountant For special refund RM10,000 requires audit certificate signed by anapproved company auditor14 15. Special Refund_______________________________________________________15 Required to fill a claim form To be refunded in 8 equal instalments over a periodof 2 years To account as output tax if special refund is claimedand goods subsequently returned to supplier 16. GovernmentPreparation18 17. 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 andbusiness community19 18. Government Preparation____________________________________________________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 rulings20 19. Government Preparation____________________________________________________Subsidiary legislations:1. GST(General) Regulations2. GST(Tribunal) Regulations3. GST(Advance Ruling) Regulations4. GST(Exempt Supplies) Order5. GST(Zero Rate Supplies) Order6. GST(Rate of Tax) Order7. GST(Designated Area) Order8. GST(Liability to be Registered) Order9. GST(Government Taxable Supplies) Order10. GST(Relief) Order11. GST(Free Commercial Zone) Order21 20. Government Preparation____________________________________________________Getting the tax accepted Outreach program1. Awareness Consumer Business Government2. Training organized by: MOF, Customs Business chambers, professionalbodies, FMM, SME Corp, NGOs,association etc22 21. Government Preparation____________________________________________________Getting the people ready Organization structure Manpower Recruitment Training Taxpayer service Call centre: 1300-88-8500, 03,7806 7200 GST portal24 22. 23. Government Preparation____________________________________________________Getting the system ready1) Core module Registration Tax return Payment Refund2) Infrastructure3) Integration ( Customs, MOF, JPN, SSM and banks)4) Training26 24. BusinessPreparation27 25. GST Implementation Approach____________________________________________________To implement a GST compliant systemGSTProjectTeam1st phaseDevelopimplementationplan2nd phaseImplementationand execute3rd phasePostimplementationTax regulatorycomplianceDocumentationand systemLegal andtransitionalissuesEducationandtrainingVendor andsuppliercommunication28 26. Business Preparation____________________________________________________GST Implication on Registration Pre-registration Registration exercise begins 6 months before GSTimplementation date( 1 October 2014) Mandatory registration To register 3 months before GST implementations date (1January 2015) Voluntary registration( remain registered not less than 2 years) Compliance costs Vs input tax credit claims Supplier and customer profile29 27. 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 201130 28. Business Preparation_____________________________________________________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 certificate31 29. Business Preparation_____________________________________________________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 GSTpayment upfront Review credit terms to customers Review requirement to apply for special schemes(e.g.Approved Trader Scheme)32 30. Business Preparation____________________________________________________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 andsecond-hand goods under margin scheme 21-day rule33 31. Business Preparation____________________________________________________GST Implication on Output Tax Gifts &gt; RM500 subject to GST Commercial samples in a form not ordinarily available for sale to thepublic not subject to GST Deemed supply e.g. private use and disposal of business assetssubject to GST Supplies to connected persons Business assets held on last day of registration34 32. Business Preparation_____________________________________________________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 thanemployees or existing customers)35 33. Business Preparation_____________________________________________________GST Implication on Contracts Avoid long term contract without legal review Zero-rated supply for 5 years for non reviewable contractGST Implication on Human Resource Upgrade staff understanding of GST Avoid unnecessary mistakes False information may open to audit case36 34. Business Preparation_________________________________________GST Implication on System Review system and processes Perform complete mapping of transactions to identify requiredchanges Online application and submission to tax agency Computerised system Ready-made software Upgrading present system37 35. Wish List_____________________________________________________38Both business community andGovernment are well-prepared toimplement GSTImplementation problems areminimizedlMinimum impact on prices ofgoods and servicesPublic accept GSTimplementation 36. Thank youPAM does not take responsibility on the accuracy of the aboveinformation. The information aforementioned is based on PAMs internalresearch made available from accounting books to the best of PAMsknowledge only for your easy reference. Members are encourage to seekfurther advice from a qualified auditor/accountant.Members who wish to rely on the above information have been informedof the risks associated with relying on such information. </p>