Your Partner in GST

1. Introduction …………………………………………………

2. Why GST? …………………………………………………..

3. What is GST? ……………………………………………….

4. Proposed GST Model ……………………..……………..….

5. Responsibilities and Obligation of Registered Person ……

6. Conclusion ……………………………………………………

Content

3 - 4

5

6 - 8

9

10-13

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ECOVIS AHL Tax Services Sdn. Bhd., 9-3, Jalan 109F, Plaza Danau 2, Taman Danau Desa, 58100 Kuala Lumpur, Malaysia

Phone: +60(3)7981 1799 Fax: +60(3)7980 4796 E-Mail: kuala-lumpur@ecovis.com

A member of ECOVIS International tax advisors accountants auditors lawyers in Argentina, Australia, Austria, Belarus, Belgium, Brazil,

Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Great Britain, Hong Kong,

Hungary, India, Indonesia, Ireland, Italy, Japan, Republic of Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Republic of Macedonia,

Malaysia, Malta, Mexico, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, Serbia, Singapore, Slovak Republic, Slovenia,

Spain, Sweden, Switzerland, Taiwan, Tunisia, Turkey, Ukraine, Uruguay, USA (associated partners) and Vietnam

.

ECOVIS International is a Swiss association. Each Ecovis Member Firm is an independent legal entity in its own country and is only liable

for its own acts or omissions, not those of any other entity. ECOVIS AHL is a Malaysia Member Firm of ECOVIS International.

The above material is for business clients and associates. Whilst every care has been taken while compiling this material, we make no

representation or warranty (expressed or implied) about the accuracy, suitability, reliability or completeness of the information for any

purposes. Ecovis AHL, its employees accept no liability and disclaim all responsibility for the consequence of anyone acting in reliance to

the above information.

2www.ecovis.my

Your Partner in GST

GST now and forever!

The Malaysian Government has decided to implement the

Goods and Services Tax (GST), a broad-based consumption tax

to replace the current single-stage sales and services tax

effective from 1 April 2015.

With the implementation of GST coming nearer to our

doorsteps, businesses must now start to prepare and to equip

their people with GST knowledge despite facing with limited

resources and manpower. The countdown is started since 2014

& GST Budget tabled by our Prime Minister on 25 October

2013.

Malaysians shall know GST from now and forever…..

We have summarized the followings pertaining to GST as an

appetizer for your GST implementation full course menu in the

coming 16 months.

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Your Partner in GST

Zimbabwe

Turkmen.UgandaUkraineCanadaCroatia

Uzbekistan

VanuatuVenezuela

Vietnam

Zambia

Portugal

Senegal

Luxembourg

Nicaragua

Sweden

No of Country

CountryTime Period

2000 - 2009

1990 - 1999

1980 - 1989

1970 - 1979

1960 - 1969

1948 - 1959 2France

P. N. Guinea

ParaguayPolandCzech RepFaroe Island

Romania

RussiaSamoa

Singapore

Slovakia

Mexico

Morocco

Honduras

Ireland

Germany

Rwanda

Namibia

T & TobagoTogo

ThailandTanzaniaTajikistanSwitzerlandRomaniaSri LankaS. AfricaSlovenia

Tunisia

Taiwan

Spain

Peru

Panama

Norway

Uruguay

Gambia

India

CameroonKazakhstanKenyaCyprusChinaKyrgyzstanLatviaLiechtensteinLithuaniaMadagascar

Turkey

Haiti

Hungary

UK

Bolivia

Chile

Ivory coast

Botswana

35

JamaicaCambodia

PakistanIcelandBurkina Faso

NigeriaGuineaBulgaria

NepalGhanaBenin

MozambiqueGeorgiaBelarus

MongoliaGabonBarbados

MoldovaFinlandBangladeshMauritiusFijiAzerbaijanMauritaniaEstoniaArmeniaMaltaEl SalvadorA l g e r i a

70

MaliEgyptAlbania

PhilippinesMalawiGuatemala

NigerJapanGreece 21New ZealandIndonesiaDom. Rep.

South KoreaEcuadorBelgium

ItalyCosta RicaAustria 20

IsraelColombiaArgentina

7NetherlandsDenmarkBrazil

Macedonia

St. Vincent

Eq. Guinea

Ant & BarbudaTongaCent. Af. RepSudan

SerbiaCape Verde

LesothoLebanonLaos

KosovoMontenegro

Guyana

Ethiopia

Bosnia Herz.

Dominica Isl.Belize Jordan

ChadAustralia

Most countries have implemented GST / VAT

Total country = 160

No threshold

Baht 1.8 mil

SGD 1 mil

Peso 1.5 mil

Lao Kip 400 mil

Riel 30 mil – 125 mil

Rupiah 600 mil

Registration Threshold(National Currency)

-10101999Vietnam

59,0001071992Thailand

782,000731993Singapore

34,00012101998Philippines

49,00010102009Laos

7,000 – 30,00010101999Cambodia

68,000 10101984Indonesia

Registration Threshold (USD)

Current Rate(%)

Initial Rate(%)

Year Country

VAT/GST in ASEAN countries

Malaysia 2015 6 N/A RM 500,000 150,000

(approximate)

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

Monaco

Isle of Man

MadeiraAzores

2010 - 2013 Saint Kitts and NevisRepublic of CongoDemocratic Republic

of the CongoGrenadaSeychelles

5

Burundi Iran

Jersey

Sierra Leone Guinea-Bissau Niue

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Your Partner in GST

Part of the government’s tax reform programme to make it more efficient, effective,business friendly, transparent and capable of generating a more stable source ofrevenue

effective

• self policing

• able to address inherent weaknesses of the current sales tax and

service tax

efficient

• less bureaucracy

business friendly

• availability of various schemes

• reduce business cost

transparent

• You know you are paying tax

• Industries Guide

capable of generating a more stable source of revenue

• not susceptible to economy downturn

• depleting resource (petroleum)

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Your Partner in GST

Goods and Services

Tax (GST)

Rate = 6 %

Threshold =

RM500,000

To replace current consumption tax

GST is charged on goods and services that are

● supplied in Malaysia (rental, sale of goods, advertisement etc.)

● imports

A consumption tax

In the form of value added at each stage of the

supply/distribution chain

GST on inputs is allowed to be offsetted against GST

on output .

5%, 6%, 10% & specific

rate

Various threshold

Sales Tax &

Service Tax (SST)

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Your Partner in GST

Types of supply Output tax Input tax

Standard-rated 6% Claimable

Zero-rated 0% Claimable

Exempted No GST charged Not claimable

Manufacture

r claims back

GST

Manufacturer Wholesaler Retailer

Consumer

Consumer

pays

6%

GST only

Wholesaler

claims back

GST

Retailer

claims

back GST

GST AT 6%

1. Standard-Rated

Selling price : RM125

GST : RM7.50

Total selling price : RM132.50

Purchase cost : RM100

GST* : RM6

Purchase price : RM106

Delivery /

supply

chain

Manufacturer Wholesaler Retailer Consumer

Added Value : RM25

(Add GST : RM1.50)

Value-Adding

Activity

*Note: claim input tax credit

Example:

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Your Partner in GST

Consumer

does not

pay any

GST

2. Zero-Rated

Manufacturer

claims back

GST

Manufacturer Wholesaler Retailer Consumer

Wholesaler

claims back

GST

Retailer

claims

back GST

GST AT 0%

3. Exempted

Supplier Private hospital Consumer

Supplier

claims tax

paid on input

Private hospital

cannot claim tax

paid on input

GST AT 6% NO GST

Consumer

does not

pay any

GST

8www.ecovis.my

Your Partner in GST

Agriculture products –

paddy & fresh vegetables

Foodstuff – rice, sugar,

table salt, plain flour,

cooking oil

Livestock supplies – meat,

muttons, swinePoultry & eggs

Fish, prawn, cuttlefish,

crabs, oyster, cockles, etc.

Supply of the first 200 units

of electricity to domestic

users

Supply of the first 35m³

of water to domestic users

Exported goods

and services

0% Zero-rate Supply

Exempt Supply

Rail Buses

Water transportation

Taxi/ Hired car

Highway toll

Residential property

Land for general use

Financial servicesPrivate health & education

GST

No GST on the supply of goods and services made by

Federal and State Government except certain services by

government department

● e.g. water supply and advertising

Statutory body and local authority in respect of its regulatory and

enforcement functions

Government Services

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Your Partner in GST

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

1. Registration : GST Portal

2. Liability to Register

Mandatory

• Making taxable supply of goods and services in Malaysia

• Turnover exceeded the prescribed threshold

• Proposed turnover RM500,000.00

• Turnover is based on the total value of the taxable supplies for a 12

month period

Voluntary

• For businesses below threshold

• Must remain in the system for at least 2 years

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Your Partner in GST

3. Accounting for GST

Sponsorship• Cash sponsor (donation) and grant

not subject to GST

• Sponsorship in kind or cash with benefit in return such as

advertising

subject to GST

Royalty

• Payment of royalty is considered as payment for a right to use the

intellectual property or trade mark

subject to GST

4. Responsibilities and Obligations

a) Issuance of tax invoice

b) Submission of returns

c) Payment of tax

d) Keeping of records

Deposit / Booking Fees• If it is part of payment, subject to GST

• If it is not part of payment, not subject to GST

• forfeited deposits or booking fees not subject to GST

Cancellation fees• not subject to GST

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Your Partner in GST

a. Issuance of Tax Invoice

Types of tax invoice when making taxable

supplies

full tax invoice

simplified tax invoice

b. Submission of Tax Return

Taxable Period

12www.ecovis.my

Period Businesses Annual Turnover

Quarterly Basis Not exceeding RM5,000,000

Monthly Basis Exceeding RM5,000,000

Six Month Basis Special Case

Your Partner in GST

Sample Only

d. Keeping of Records

Records

Bahasa Malaysia or English

7 years

can be kept in soft or hard copy

to be kept in principal place of business

c. Claiming of Input Tax

Conditions:

Claimant must be a taxable person

Must have a valid tax invoice

Invoice issued under the name of the claimant

Goods and services acquired are not subject to any input taxrestriction e.g. motorcars

Goods and services are acquired for the purpose of makingtaxable supply

GST returns and payments must be submitted not later than the

last day of the month following the end of the taxable period

Electronic filing is encouraged

Net tax will be refunded within

14 working days for on-line submission

28 working days for manual submission

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Your Partner in GST

Malaysian GST Model

The GST model has considered the welfare of the rakyat especiallythe lower income group

zero rating basic foodstuff, water and electricity

no GST on government services

exempting public transport, health, education, toll highway,financial and residential property

the proposed threshold exclude small businesses from GST net

The GST rate to be set at a relatively low rate to minimise GSTimpact on prices

Most of the zero-rated items – prices will be lower

14www.ecovis.my

Your Partner in GST

In view of the above, are you prepared for implementation?

For further clarifications please do not hesitate to contact us.

Ang Heng Ann (Tax) - hengann.ang@ecovis.com

Esther Choy (Business Development) - esther.choy@ecovis.com

15www.ecovis.my

ECOVIS AHL Tax Services Sdn. Bhd., 9-3, Jalan 109F, Plaza Danau 2, Taman Danau Desa, 58100 Kuala Lumpur, Malaysia

Phone: +60(3)7981 1799 Fax: +60(3)7980 4796 E-Mail: kuala-lumpur@ecovis.com

A member of ECOVIS International tax advisors accountants auditors lawyers in Argentina, Australia, Austria, Belarus, Belgium, Brazil,

Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Great Britain, Hong Kong,

Hungary, India, Indonesia, Ireland, Italy, Japan, Republic of Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Republic of Macedonia,

Malaysia, Malta, Mexico, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, Serbia, Singapore, Slovak Republic, Slovenia,

Spain, Sweden, Switzerland, Taiwan, Tunisia, Turkey, Ukraine, Uruguay, USA (associated partners) and Vietnam

.

ECOVIS International is a Swiss association. Each Ecovis Member Firm is an independent legal entity in its own country and is only liable

for its own acts or omissions, not those of any other entity. ECOVIS AHL is a Malaysia Member Firm of ECOVIS International.

The above material is for business clients and associates. Whilst every care has been taken while compiling this material, we make no

representation or warranty (expressed or implied) about the accuracy, suitability, reliability or completeness of the information for any

purposes. Ecovis AHL, its employees accept no liability and disclaim all responsibility for the consequence of anyone acting in reliance to

the above information.

Your Partner in GST