MALAYSIAGoods & Services Tax (GST)

Presented by : Vimmy Yap

VAT/GST in ASEAN countries

Country Year

InitialRate (%)

Current

Rate(%)

Registration Threshold

(National currency)

RegistrationThreshold

(USD)

Indonesia 1984

10 10 Rupiah 600 mil 68,000

Cambodia 1999

10 10 Riel 30 mil – 125 mil

7,000 – 30,000

Loas 2009

10 10 Lao Kip 400 mil 49,000

Philippines

1998

10 12 Peso 1.5 mil 34,000

Singapore

1994

3 7 SGD 1 mil 782,000

Thailand 1992

7 10 Baht 1.8 mil 59,000

Vietnam 1999

10 10 No threshold -

Only Brunei, Malaysia and Myanmar have not implemented VAT/GST

OVERVIEW OF MALAYSIA GST

Goods and Services Tax (GST)

6%

Sales and Service Tax (SST)

10% & 6%

WEAKNESS OF SALES TAX

OVERVIEW OF GST

Malaysia GST :-

Implementation date : 1st April 2015

Rate fixed at 6%

Broad based consumption tax

Multi-stage tax

Self monitor system

OVERVIEW OF GST

Zero-rated (0%) and Exempted Supplies

1. GST will not be imposed on basic food items such as rice, sugar, salt, flour, cooking oil etc.

2. GST will not be imposed on piped water supply and 1st 200 units of electricity for domestic users

3. GST will not be imposed on services provided by the Government eg issuance of passport, licenses, healthcare services, school education.

4. Transportation services eg. bus, train, LRT, taxi, ferry, boat, highway toll, education and health services are exempted from GST.

SPECIAL TRANSACTION

E – Commerce

Goods sold through electronic transaction = goods supplied in conventional manner. Supplier charges GST on supplies.

Services subject to GST if both suppliers and recipients belong in Malaysia.

Belong in Malaysia -> Internet protocol (IP) address of Malaysia for either supplier or recipient.

SCOPE OF GST

Scope of Tax:

Any taxable supply of goods & services

Made in Malaysia

By a taxable person

Made in the course or furtherance of any business

Importation of goods

8

Types of supply

Output Tax Input Tax

Standard rated 6% Claimable

Zero rated 0% Claimable

Exempt No Non-claimable

MALAYSIA GST MODEL

STANDARD RATED SUPPLY

MALAYSIA GST MODEL

Cost + GST

Selling Price

GST Output

Tax (6%)

Total

GST Input Tax

Net GST

Payable

Materials Supplier

- 100 6 106 0 6

Manufacturer 106 300 18 318 (6) 12

Wholesaler 318 500 30 530 (18) 12

Retailer 530 600 36 636 (30) 6

Consumer 636 Final consumer pays the GST RM36

STANDARD-RATED (GST 6%)

COMPUTATION OF GST

Input tax > Output tax = GST REFUND

Input tax < Output tax = GST PAYMENT

Taxable period

Annual sales Category Taxable period of

RM 5 Million and above

A One month

Less than RM 5 Million B Three months

COMPUTATION OF GST RETURN

GST REFUND

Refund of input tax

Within 14 working days for online submission Within 28 working days for manual submissionfrom the date the return is received

overpayment can be claimed within 6 years (subject to conditions) from the date payment made

(a) taxable person – amend GST-03(b) non-taxable person – amend GST-04

No. of days tax remain unpaid

Rate of penalty Cumulative

1-30 days 5% 5%

31-60days 5% 10%

61-90days 3% 13%

91-120days 3% 16%

121-150days 3% 19%

151-180days 3% 22%

181 days or ≥ 3% 25%

LATE PAYMENT PENALTY

Tax Remains Unpaid

DateRate of Penalty

Subject to 6% GST

(‘000)

Penalty Amount (‘000)

Cumulative Penalty

Amount (‘000)

1 – 30 days 1 – 30 June

5%

1,500

75 75

31 – 60 days

1 – 31 July

5% 75 150

61 – 90 days

1 – 31 Aug

3% 45 195

91 – 120 days

1 – 30 Sept

3% 45 240

121 – 150 days

1 – 31 Oct

3% 45 285

151 -180 days

1 – 30 Nov

3% 45 330

181 days or more

After 1 Dec

3% 45 375

Tax Penalties

• Estimated turnover :RM25m • Total output tax payable :RM1.5m + RM 0.375m = RM

1.875m

17

Illustration

18 IRAS Annual Report 2012/13, appendix

ZERO RATED SUPPLY

ZERO-RATED SUPPLIES (0%)

To consumer - complete relief from GST (especially lower income group)

agriculture products, eg. rice, paddy foodstuff – rice, sugar, salt, flour, cooking oil livestock – eg. cow, goat poultry – eg. chicken, duck fish, shrimps, prawns 1st 200 units of electricity to domestic household supply of treated water to domestic consumers

Malaysian products and services more competitive abroad exports of goods and services

EXEMPT SUPPLIES

EXEMPT SUPPLIES

Goods

land used for residential or agricultural purposes or

general use (burial ground, playground or religious

building) building used for residential purposes.

EXEMPT SUPPLIES

Services domestic transportation – public transport toll highway education services childcare services healthcare services financial services funeral, burial and cremation services

* Note : The relevant Act of each category

SCOPE AND CHARGE

Registration

Sole Proprietorship

Company

Partnership

Association

Businesses with

turnover≥ RM

500,000

GST REGISTRATION

Are you carrying a business?

Taxable Supplies ?

Mandatory Registration

Taxable turnover ≥ RM500,000 ?

No

No

No

Voluntary Registration

At least maintain 2 years

Mandatory Registration

Any person who makes taxable supply of goods and services in Malaysia

Business with annual sales of RM 500,000 and above

Calculation of taxable turnover for registration is based on total value of taxable supplies for 12 months period

GST REGISTRATION

GST REGISTRATION

Method Explanation

Historical Turnover Total value taxable supplies of any month and the previous 11 months.

Future Turnover Total value of taxable supplies of any month and the next 11 months.

Determine of taxable turnover

27

Note:

Pre-Registration before implementation of GST i. Application to be made 3 months before implementation date ii. Pre-registration exercise STARTED ON 1 JUNE 2014

Late Registration Period (Days)

Cumulative (RM)

1 - 30 1,500

31 – 60 3,000

61 – 90 4,500

91 – 120 6,000

121 – 150 7,500

151 – 180 9,000

181 - 210 10,500

211 – 240 12,000

241 – 270 13,500

271 – 300 15,000

301 – 330 16,500

331 – 360 18,000

Exceeding 360 20,000

LATE REGISTRATION PENALTY

the directors of the company or the partners of the firm or officials or committee members of the society or other body of persons, as the case may be,

shall together with the company, limited liability partnership, firm, society or other body of persons be jointly and severally liable for the tax, surcharge, penalty, fee or any other money:

GST Act 2014 – S.53

GST ESSENTIAL PRINCIPLES

TAX INVOICES

Issue by taxable person who make taxable goods or

services for the purpose of business in Malaysia.

Serves as an evidence to support a customer’s claim for deduction of input tax.

Issued by every registered person. The suppliers must keep a copy and recipient keep the original.

Shall issue within 21 days after supply has taken place.

Must contain prescribed particulars.

30

31

Simplified Tax Invoice:

Must get approval from Director General.

Business usually generate high volume of invoices daily.

Example: Supermarket, Petrol Kiosks, Parking & Restaurants.

Amount > RM 30 of Input Tax = Full Tax Invoice.

Amount ≤ RM 30 of Input Tax = Simplified Tax Invoice.

32

TAX INVOICES

33

KEY FOCUS FOR SUCCESSFUL GST IMPLEMENTATION

People

Technology

Process

Education & training Staffing for the upcoming GST Communication plan

IT system configuration and modification

Current IT system caters for GST

To understand and identify the “As It” and “To Be” in order to be GST compliant

Business process flows, physical flows and document flows, place and time of supply, rules and managing cash flow

Supply chain analysis of suppliers and customers

Transitional issues

GST IMPACT ACROSS ALL BUSINESSES

GST

Information System

Suppliers

Customers

Finance & Admin

Internal / Human Capital

Strategy

Legal

Sales & Marketing Strategies

Your Challenges :

Respond to the GST policy

Addressing GST strategic issues

Identifying processes impacted by GST

Analyzing the GST impact

Establishing the GST Steering Committee

Communication change

Developing the GST implementation

strategy

Identifying resource needs

Training of personnel on GST

Managing the transition of GST

Our Solutions :

GST Implementation byGST.com.my

Stage 1 : Preliminary Assessment

Stage 2 : GST Implementation Strategy Development

Stage 3 : Training & Test Run

GST Implementation Challenges

STAGES OF GST IMPLEMENTATION

1st stage : Preliminary Assessment

2nd stage: GST ImplementationStrategy Development

3rd stage: Training and test run

ISSUE TO CONSIDER IN GST IMPLEMENTATION

Taxability of supplies made Types of acquisition and the eligibility for input tax

credit Impact of HR benefits provided to employee Contract Systems and documentation

issues

AUG SEPT OCT NOV DEC JAN APRIL

STAGE 1 :PRELIMINARY ASSESSMENT

STAGE 3 : TRAINING& TEST RUN

STAGE 2 : GST IMPLEMENTATION

PLAN YOUR COMPANY GST TIMELINEIMPLE

.

FEB

Test run

Year 2014

www.gst.com.my

MAC

Malaysia GST consulting company.

Our Chief Advisors are trained by the GST division of Royal

Malaysia Customs Department (RMC).

Own dedicated GST team is formed.

Started first GST implementation case in year 2010.

Professional services:-

(a) GST Implementation

(b) GST in house & public training

40

GST VINTAGE SDN. BHD.

GST STEERING COMMITTEES

Client GST Team

GST Professional Team

GST Software Team

GST PROJECT TEAM

For more information : www.gst.com.myE-mail : info@gst.com.myFacebook : GSTconsulting