malaysia gst presentation

8/18/2019 Malaysia GST Presentation

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Salient Featuresof GST

Goods and Services Tax GST)

1

BRIEFING AGENDA

BASIC ELEMENTS OF GST

WHY GST?

WHAT IS GST?

PROPOSED GST MODEL

REGISTRATION FOR GST

2

1

3

5

4

2

WHY GST?

What is GST?

1

3

WHAT IS GST?

Sir Roger DouglasFormer Finance Minister

New Zealand

Working Paper – The New Zealand GST

Policy Choice and Its Political Implications

“The success of GST can be traced to

5 key process elements”

The Political Will

The Right People

The Way In WhichThe Proposal Was

Packaged

An EffectiveConsultative

Process

An EffectiveCommunicationProcess”

4

WHAT IS GST?

Principles of GST

• A broad-based consumption tax

• Tax based on value added

• Multi stage tax up to the retail stage

• Cover all sectors with minimum exemptions and

zero rating

• Tax incurred on inputs is allowed as a credit to the

registered person (offset against output tax)

5

WHAT IS GST?

For supply of goods and services made in Malaysia:

• By registered business under GST Act

For importation of goods:

• By the RMC at point of importation

Who Collects GST

6


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WHAT IS GST?

Scope Of GST

• Supply of goods and services

o GST will be charged on any supply of goods andservices if it is : made in Malaysia A taxable supply Made by a taxable person in the course or furtherance of business

• Importation

imported goods

- GST at the duty point

Imported services

- GST is accounted by the recipient (reverse chargemechanism)

7

WHAT IS GST?

Manufacturer

Goods

Services

INPUT OUTPUT

GST on inputs

= Input taxClaimedinput tax

GST on outputs

= Output tax

Rawmaterials,

Rents,

Electricity,

Furniture,

Professional

services etc.

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PROPOSED GST MODEL

PROPOSED GST

MODEL

2

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PROPOSED GST MODEL

Type of supplies

• Standard-rated supplies are subject to a specific rateof tax (6%)

eligible to claim input tax credit on businessinputs

• Zero-rated supplies are subject to a zero rate of tax

eligible to claim input tax credit on businessinputs

• Exempt supplies are exempted from GST

not eligible to claim GST incurred on businessinputs

• Out of scope supply

supply outside Malaysia

supply by non registrant

T

AX

A

BL

E

S

U

P

PL

Y

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PROPOSED GST MODEL

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Types of supply Output tax Input tax

Standard-rated 6% Claimable

Zero-rated 0% Claimable

Exempted No GST charged Not claimable

OUTPUT TAX > INPUT TAX PAYABLE TO CUSTOMS DEPT

INPUT TAX > OUTPUT TAX REFUNDABLE FROM CUSTOMS DEPT

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Standard Rate

6%

Proposed GST model – standard rated supply

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PROPOSED GST MODEL

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HOW GST WORKS? - STANDARD RATED

Manufacturer

claims back

GST on input

Consumer

pays

6%GST only

Wholesaler

claims back

GST on input

Retailer

claims back

GST on input

Manufacturer Wholesaler Retailer Consumer

GST AT 6%

PROPOSED GST MODEL

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HOW GST WORKS? - STANDARD RATED

Selling price : RM125

GST (6%) : RM7.50

Total selling price :RM132.50

Purchase cost : RM100

GST (6%) : RM6

Purchase price : RM106

Delivery / supply chain


*Note: claim input tax

Value-Adding

Activity

Added Value : RM25

(Add GST : RM1.50)

(GST Payable to Customs Dept = GST on Added Value) = Output Tax – Input Tax = RM7.50 – RM6.00

= RM1.50

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GST Mechanism (standard rate)

• Tax computation on STANDARD RATED SUPPLY

1.804.206.00100.00Retailer

3.00

0.60

0

Tax on

Input(RM)

70.00

50.00

10.00

Sales(RM)

6.00GST collected by the Government

1.204.20Wholesaler

2.403.00Manufacturer

0.600.60Supplier

Net Tax

Paid(RM)

Tax on

Output(RM)

BusinessEntity

GST rate at 6%

Final consumer pays RM106.00

300 units a month-domestic use

only

Exported goods andservices

Proposed GST model – Zero rated supply

Domestic useonly

Infant milk

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PROPOSED GST MODEL

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HOW GST WORKS? - ZERO RATED

Manufacturer

claims back

GST on input

Consumer

does not

pay anyGST

Wholesaler

claims back

GST on input

Retailer

claims back

GST on input


GST AT 0%

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GST Mechanism (Zero Rated)

• Tax computation on ZERO RATED SUPPLY

000100.00Retailer

0

0.60

0

Tax on

Input

(RM)

70.00

50.00

10.00

Sales

(RM)

0GST collected by the Government

00Wholesaler

-0.600Manufacturer

(Sugar)

0.600.60Supplier

Net Tax

Paid

(RM)

Tax on

Output

(RM)

Business

Entity

GST rate at 6%Final consumer pays RM100.00


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RAIL TRANSPORTATION :KTM, ERL, LRT, Monorail

BUSTRANSPORTATION

-school, express,

TAXIS

RESIDENTIAL HOUSES LAND FOR PUBLIC USEFINANCIAL SERVICES

HEALTH AND EDUCATION SERVICES

TOLLS

X

WATER TRANSPORTATION-ships, ferries and boats

Proposed GST model – Exempt supply

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PROPOSED GST MODEL

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HOW GST WORKS? - EXEMPT

Supplier Private hospital Consumer

Supplierclaims tax

paid on input

Private

hospitalcannot claim

tax paid on

input

No GST imposed

on the supplyto consumer

GST AT 6 % NO GST

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GST Mechanism (Exempt)

• Tax computation on EXEMPT SUPPLY

04.200100.00Private

ospital

3.00

0.60

0

Tax on

Input(RM)

70.00

50.00

10.00

Sales(RM)

4.20GST collected by the Government

1.204.20Wholesaler

2.403.00Manufacturer

0.600.60Supplier

Net Tax

Paid(RM)

Tax on

Output(RM)

BusinessEntity

GST rate at 6%

Final consumer pays RM104.20 22

Proposed GST model – Supply by Government

Out of Scope

All supplies by Federal & State

government

Eg. healthcare services provided

by h osp i ta l and c l in ic , educat ion

services by primary, secondary

school and tert ia ry educat ion,

issuance of passport, issuance

of l icences and permits by the

Road Transport Department

Supplies made in the regulatory and

enforcement (R&E) functions

Eg. Assessment ra te co l lec t ion,

issuance of licenses, penalty

Subject to GST

Supplies that have been directed byMinister in the GST (Government

Taxable Supply) Ord er

Eg. Supply made by RTM , Water

Department

Non R&E functions

Eg. Business activities for example

rental facilities , parking and etc.

Acquisitions

Need to pay GST on their

acquisitions

Relief on selected goods

Need to pay GST on their acquisitions

Relief on selected goods

Federal &

State Government

Local Authority &

Statutory Body

Why GST?

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● Part of the government’s tax reform programme

● Weaknesses of sales tax and service tax

● Make the taxation system more effective, efficient, business

friendly, transparent and capable of generating a more stable

source of revenue

effective

self policing

in-build cross checking features

able to address inherent weaknesses of the current sales tax and

service tax

efficient

less bureaucracy 24


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business friendly

availability of various schemes

reduce business cost

transparent

GST will be shown on the invoice

public ruling

capable of generating a more stable source of

revenue

not susceptible to economy downturn (unlike

income tax),

reduce reliance on direct taxes

depleting resource (petroleum)

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Sales Tax & Service Tax

(SST)GST

6%5%, 6%, 10%

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Product : biscuitSales tax at 5% dan services tax at 6%

Factory price : RM4.00Sales tax 5% = RM0.20

Consumer paid = RM7.63(RM7.20 + RM0.43)

TOTAL Tax Paid = RM0.63(RM0.20 + RM0.43)

Purchase price : RM4.20Hotel selling price : RM7.20

(RM4.20 + RM3.00)Services tax 6% = RM0.43

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SST – Double taxation due to multiple tax

GST:Factory Price: RM4.00

GST (6%) = RM0.24

GST:Purchase Price : RM4.00

Hotel Selling Price : RM7.00

(RM4.00 + RM3.00)

GST (6%) = RM0.42

GST:Consumer Paid = RM7.42

(RM7.00 + RM0.42)

Total Tax Paid = RM0.42

SAVING = RM0.21

MOST COUNTRIES HAVE IMPLEMENTED GST / VAT TOTAL COUNTRY = 160

OCEANIA

No of Countries = 7

Highest tax rate = 15%

Lowest Tax = 5%

ASEAN

No of Countries = 7


Lowest Tax = 7 %No of Countries = 44


Lowest Tax = 5%

No of Countries = 19


Lowest Tax = 3%



Lowest Tax = 10%


Highest tax rate = 17.5%

Lowest Tax = 5%



Lowest Tax = 5%

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MOST COUNTRIES HAVE IMPLEMENTED GST / VAT TOTAL COUNTRY = 160

Ant & Barbuda

Tonga

Zimbabwe

Bahamas

Turkmen.

Uganda

Ukraine

Canada

Croatia

Uzbekistan

Vanuatu

Venezuela

Vietnam

Zambia

Portugal

Senegal

Luxembourg

Nicaragua

Sweden

CountryTime Period

2000 - 2009

1990 - 1999

1980 - 1989

1970 - 1979

1960 - 1969

1948 - 1959 France

Cent. Af. Rep

Macedonia

Montenegro

St. Vincent

P. N. Guinea

Paraguay

Poland

Czech Rep

Congo

Romania

Russia

Samoa

Singapore

Slovakia

Mexico

Morocco

Honduras

Ireland

Germany

Sudan

Serbia

Rwanda

Namibia

T & Tobago

Togo

Thailand

Tanzania

Tajikistan

Switzerland

Suriname

Sri Lanka

S. Africa

Slovenia

Tunisia

Taiwan

Spain

Peru

Panama

Norway

Uruguay

Cape Verde

Gambia

India

Comoros

Cameroon

Kazakhstan

Kenya

Cyprus

China

Kyrgyzstan

Latvia

Liechtenstein

Lithuania

Madagascar

Turkey

Haiti

Hungary

UK

Bolivia

Chile

Ivory coast

LesothoEthiopiaBotswana

LebanonEq. GuineaBosnia Herz.

LaosDominica Isl.Belize

JordanChadAustralia

JamaicaCambodia

PakistanIcelandBurkina Faso

NigeriaGuineaBulgaria

NepalGhanaBenin

MozambiqueGeorgiaBelarus

MongoliaGabonBarbados

MoldovaFinlandBangladesh

MauritiusFijiAzerbaijan

MauritaniaEstoniaArmenia

MaltaEl SalvadorAlgeria

MaliEgyptAlbania

PhilippinesMalawiGuatemala

NigerJapanGreece

New ZealandIndonesiaDom. Rep.

KoreaEcuadorBelgium

ItalyCosta RicaAustria

IsraelColombiaArgentina

NetherlandsDenmarkBrazil

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

• Malaysia – “Upper middle Income” & GST at 6% is the lowest.

VAT/GST in ASEAN countries

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COUNTRY YEAR OFIMPLEMENTATION

INITIALRATE

(%)

CURRENTRATE

(%)

STATUS

Singapore 1994 3 7 High Income

Thailand 1992 10 7 Upper Middle Income

Indonesia 1984 10 10 Lower Middle Income

Philippines 1988 10 12 Lower Middle Income

Laos 2009 10 10 Lower Middle Income

Vietnam 1999 10 10 Lower Middle Income

Cambodia 1999 10 10 Low Income


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COUNTRY YEAR OFIMPLEMENTATION

INITIALRATE

(%)

CURRENTRATE

(%)

COUNTRYSTATUS

United Kingdom 1973 10 20 High Income

Australia 2000 10 10 High Income

New Zealand 1986 10 15 High Income

Norway 1970 20 25 High Income

Turkey 1984 10 18 Upper Middle Income

Morocco 1986 19 20 Lower Middle Income

Niger 1994 12 19 Low Income

VAT/GST in other countries BASIC ELEMENTS OF GST

BASIC ELEMENTS

OF GST

4

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Scope and charge

GST is charged on

the taxable supply of goods and services

made by a taxable person

in the course or furtherance of business

in Malaysia

GST is charged on the imported goods/services

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Meaning of person Individual, corporation, Federal Government, State

Government, statutory body, local authority, society,

trade union, co-operative society, trust, partnership

and any other body, organisation, association or

group of persons, whether corporate or

unincorporated

Meaning of a taxable person a person who is or is required to be registered under

GST

34


35

What is Consideration?

• any payment in money or otherwise

• any act

• any forbearance,

in respect of / in response to / or for the inducement of,

the supply of any goods or services

It does not matter whether the consideration is by the

recipient of the supply or by any other person

Whether or notvoluntary

Supply

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Meaning of Supply

to serve, to furnish, to provide something

in the case of goods – the transfer of title or

ownership, outright cash or credit sale, hire

purchase etc

in the case of services – the provision of

services

anything done for a Consideration is a Supply

sale, barter, exchange, license, rental, lease,right to use, gifts or disposition

everything received in return for the supply

of goods or services (in monetary or non-

monetary terms) Does not include Money


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Taxable supplies include:

• Sale of goods and provision of services

• Disposal of business assets

• Application of business assets for non-business

purposes

• Business gifts exceeding RM500 given to the same

customer in the same year

• Goods which are business assets on hand at

deregistration

Supply

Supplies not subject to GST

cash donation or grants where a person does not get benefit

compensation or liquidated damages

disbursements, dividends, loan repayments or capital injection

transfer of business as a going concern

contribution to pension, provident or social security fund

supplies excluded from input tax credit (exempt supply)

Supply

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Place of supply to determine whether a supply is made in Malaysia or not

different rules for supply of goods and supply of services

Rules for supply of goods

Goods treated as supplied in Malaysia

Sec.12(2) - removal from a place in Malaysia to another place inMalaysia (local supply)

Sec.12(3) - removal from a place in Malaysia to a place outsideMalaysia (export)

B

A

CMalaysia O

Place of supply

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Goods treated as supplied outside Malaysia

Sec.12(2) - removal from a place outside Malaysia to another

place outside Malaysia (out of scope)

Sec.12(3) - removal from a place outside Malaysia to a place

inside Malaysia (import)

MalaysiaA

C O

B

MALAYSIA

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Place of supply

41

Place of supply of services

RULES FOR SERVICES

a supply of services is deemed as made in Malaysia

if the supplier belongs in Malaysia

a supply of services is deemed as made in another

country if the supplier belongs in the other country

a supply of imported services for the purpose of any

business by a person is treated as supply to and by

the recipient

(If taxable person: account input & output tax)

(if Non- taxable person: account output tax)


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Business establishment

head office or principal place of business

Fixed establishment

a branch or agency through which business is carried out

Usual place of residence

for body corporate, the place of incorporation or legally constituted

(registered office)

for unincorporated body, the place where centre of administration is

located

The supplier of services is treated as belongin g in a country

based on –

the presence of a business establishment or fixed

establishment in the country and no elsewhere ; or

if the supplier has no such establishments in anycountry, his usual place of residence; or

If the supplier has establishments in many countries, the

establishment which is most directly concerned with the

supply


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Th e recipient of services is treated as belongin g in a

country based on –

the presence of a business establishment or a

fixed establishment in the country and no

elsewhere; or

if the recipient has no such establishments in

any country, his usual place of residence; or

If the recipient has establishments in many

countries, the establishment which is most

directly concerned with the supply

If recipient is ind iv idua l and the supply is not for

the purpose of bus iness , his usual place of

residence

4344


Business /

fixed

Establishmentin Malaysia

Business / Fixed

establishment in

other country

Establishment

most directly

concern with thesupply

Belongs to

YES NO MALAYSIA MALAYSIA

NO YES OTHER COUNTRYOTHER

COUNTRY

YES YES MALAYSIA MALAYSIA

YES YES OTHER COUNTRYOTHER

COUNTRY

NO NO ---USUAL PLACE

OF RESIDENCE

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Example:

A firm located in Malaysia provides engineering services in

relation to a highway construction project in Mumbai to a

company located in India. The supply of services is treated

as made in Malaysia because the firm belongs in Malaysia.

Since such supply is made from Malaysia to a company

belongs in India (recipient), it is treated as an export of

services and subject to GST at zero rate.


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Time of Supply

It is important to determine the time of supply

because a taxable person should charge GST at the

time when supply is made and account for GST for

taxable period in which the time of supply occurs.

The time of supply rules is referred to as “tax

point”, fix the time at which a supply is treated as

taking place for GST purposes.


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Basic Tax Point

basic tax point for supply of goods

the time when goods are removed the supplier sends the goods to the customer

the customer collects the goods from the supplier the time when goods are made available

e.g. if the supplier is assembling something on the customer's

premises the time that the taxable supply has taken place or twelve

months after the removal, whichever is the earlier (for

good s, being sent or taken on approval or sale or returnor similar terms) (i.e. Consignment Sale)

basic tax point for supply of services

the time when the services are performed


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Time of supply

Events before basic tax point

Time 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.

Ordered1

JanPayment

20Mac

Invoiced9

AprBasic tax

point10Mei

Contract signed Goods removed /Services performed

Tax invoice issuedDate of payment

The time of supply is = Date of payment received = on 20 Mac


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Time of supply

Events before basic tax point

Example:

A sells and delivers gadget to B on 18 December 2015. The value of the gadget is

RM1,000 and GST amounting to RM60. A receives part payment from B on 2 October

2015 and the balance amount on 18 November 2015. A issues a tax invoice for the

whole amount of on 6 November 2015.

The time of supply for GST due amounting to RM47.09 (6/106 x RM832) is 2 October

2015 and the time of supply for GST due amounting to RM12.91 (6/106 x RM228) is 6November 2015.

2 Oct 2015 6 Nov 2015 18 Nov 2015 18 Dec 2015

Part Payment

Received RM832

Tax Invoice Issued

RM1,060

Balance Payment

Received RM228

Delivers

gadget

1st TOS 2nd TOS

GST = RM47.09 GST = RM12.91


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Time of supply

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

01/01/2016

20/03/2016

09/04/2016

10/07/2016

Contract

signedGoods removed

/ Services

performed

Tax invo ice

issuedDate of

payment

Time Of Supply

Basic Tax

Point

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Value of Supply

Why it is important?

It determines when a taxable person should reporthis supplies and account for GST in the return

Taxable Period 2

1 Jun 30 Jun / 1 Jul

Taxable Period 1

30 Jul24 June 10 July

TIME OF SUPPLY – summary

Step 1

• When is the date of goods removed or made available / serviceperformed.

• This date is the basic tax point.

• Now, go to step 2

Step 2

• Is there any payment received or tax invoice issued before the basictax point?

• If the answer yes, then the date of payment or invoice issued(whichever the earlier) is the actual time of supply.

• If the answer is no, go to step 3

Step 3

• Is there any tax invoice issued within 21 days after the basic tax point?

• If the answer is yes, then the date of tax invoice is the actual time ofsupply.

• If the answer is no, then the basic tax point is the time of supply.

3 steps to identify the actual time of supply:

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Time of Supply – Consignment Sale

- If a supply of goods is on a sale or return or similar

term, the basic tax point will be:

a) when the consignee issues a statement of sales

to the consignor stating the goods had been

sold; or

b) 12 months from the date the goods were sent to

the consignee,

whichever is the earlier .

- If the consignor issues tax invoice within 21 days

from the basic tax point, then the time of supply is

the date of the tax invoice. If tax invoice issued after21 days period, then the time of supply is the basic

tax point.

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Date Event

5 Apr 2015

(delivery date)

Registered shoes manufacturer, “A” consigns 300 pairs

of shoes to shoes store, “B”

5 Apr 2015 to

11 Apr 2015

“B” sells 50 pairs of shoes.

13 Apr 2015 “B” issues a sales statement dated 13 Apr 2015 to “A”

for the sales made during the period of 5 Apr 2015 up

to 11 Apr 2015. The basic tax po int is 13 Apr 2015. The

time of supply is the date of tax invoice if “A” issues a

tax invoice within 21 days from 13 Apr 2015.

1 May 2015 “A” issues a tax invoice to “B”. The time of supply is 1May 2015. However, if “A” issues the tax invoice after

4 May 2015, then the time of supply is 13 Apr 2015.

Example 1


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Date Event

5 Apr 2015(delivery date) Registered shoes manufacturer, “A” consigns300 pairs of shoes to shoes store, “B”

5 Apr 2016 “B” does not issue any sales statement to “A”

until 5 Apr 2016 (12 months after the delivery

date of goods to “B”). The basic tax point is 5 Apr 2016. The time of supply is the date of tax

invoice if “A” issues tax invoice within 21 days

from 5 Apr 2016.

7 Apr 2016 “A” issues a tax invoice to “B”. The time ofsupply is 7 Apr 2016. However, if “A” issues

the tax invoice after 25 Apr 2016, then the time

of supply is 5 Apr 2016.

Example 2

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Time of Supply – Construction Industry

In case where the certificate of work done is required, the

supply is treated as taking place at the earlier of the

following:

a) When payment is received by the supplier where the

consideration for the contract is wholly in money;

b) When tax invoice is issued; or

c) When certificate of work done is issued, if no tax

invoice has been issued within 21 days after the date of

issuance of the certificate.

57

Time of Supply – Construction Industry

Example

In cases which do not involve issuance of work done and

assuming you are on a monthly taxable period, if u issue

tax invoice on 3rd August, you have to account for GST in

your August GST return.

In cases which involves the issuance of certificate of work

done, if the certificate of work done was issued on 12th June and the invoice was issued after 21 days, i.e. on 9th

July, the GST has to be accounted in June GST return.

However, if the invoice was issued on 2nd July (within 21

days from the date of issuance of certificate of work

done), the GST has to be accounted in July GST return.

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Time of Supply – Continuous Supply of Services

Agreement made: issue a tax invoice at the start of any period up to

one year (not exceeding 12 months) to cover all the payments due in

that period. Invoice must state:

i) Date on which the payment is due;

ii) Amount payable exclusive of GST;

iii) Rate of GST; and

iv) Amount of GST chargeable.

The time supply:

a) The date on which the payment is due; or

b) The date he receives the payment

59


Example

Urus Sdn Bhd provides warehouse rental service to Kenawai Sdn Bhd on aquarterly basis via a rental agreement. Urus issues a tax invoice for rental

services for the 1st quarter of 2016 on 2nd January 2016 as shown below:

Urus Sdn Bhd

Kota Kinabalu

GST No. : 0000078/2015

Date: 02.01.2016

Tax Invoice No.: 2465

To: Kenawi Engineering Sdn Bhd

Inanam Industrial Area, Inanam

Rental Period/ Payment due

date

Rental Amount GST rate GST due

January ( 05.02.2016) RM2,000 6% RM120

February (05.03.2016) RM2,000 6% RM120

March (05.04.2016) RM2,000 6% RM120

60


i) If Kenawi pays the monthly rental according to the payment

due dates as per invoice, the time of supply is the

payment due date of each month, i.e. 05.02.2016,

05.03.2016 and 05.04.2016.

ii) If Kenawi pays the monthly rental on an earlier date on

01.02.2016, 02.03 2016 and 03.04.2016, the time of

supply is the date of payment received, i.e. 01.02.2016,

02.03 2016 and 03.04.2016.

iii) If Kenawi pays the rental on later date on 10.02.2016,

12.03.2016 and 15.04.2016, the time of supply is the

payment due date of each month, i.e. 05.02.2016,05.03.2016 and 05.04.2016.


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Value of Supply

Value of Supply in the context of GST :-

the consideration for calculation of GST

In the form of payment in money or in kind, in

exchange for supply

Value includes customs duty and/or excise duty

paid or to be paid

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Value of supply shall be taken to be an amount, with the addition of

GST chargeable, equal to the considerationValue = consideration (money) – GST portion

Tax Fraction = Rate / (100 + rate) = 6 / 106

E.g. A sells printer to B and receives RM260

Value of supply = consideration – GST

= RM260 – (6/106 x RM 260)

= RM260 – RM14.72 = RM245.28♦GST = RM14.72♦VALUE OF THE PRINTER = RM 245.28

Value of Supply

Value of supply (consideration in money)

V = C - T


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Value of supply (consideration not in money)

Value = open market value (OMV)

Value of imported goods

Value = value for customs duty + any customs

duty paid + any excise duty paid

Value of imported services

Value = payment paid

▪ Value of supply is not for consideration

Value = OMV of supply

Value of supply


64

consideration in money which the identical supplywould fetch, if freely offered and madebetween unconnected persons

the value of a similar supply in Malaysia,freely offered and made betweenunconnected persons

approximation of the consideration inmoney which can be obtained from the supply,by using reasonable means and available data

Open market value of any supply of goods or services shall

be in the following hierarchy:

IF CANNOT BE

DETERMINED

IF CANNOT BE

DETERMINED


Example: (1st Rule)

A trader is offered a pair of shoes as a consideration for a supply of

a bag value at RM230. The buyer (the owner of the shoes)

informed the trader that he bought the shoes from a shop in the

shopping complex for RM250 one week ago and produced an

invoice as proof. The trader then contacted his friend who is the

owner of another shop to enquire about the price. He found out

that similar branded pair of shoes he just received is priced at

RM245 in his friend’s shop. The trader can take the lowest price

available which is RM245 as the Open Market Value for the

shoes.


66

Registration

5


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67

Click

Here

www.gst.customs.gov.my

BRIEFING AGENDA

68

Click

Here

69

Registration

Person becomes liable to register for GST if

• make taxable supplies of goods and

services in Malaysia

AND

• business taxable turnover has exceededthe prescribed threshold (RM500,000.00 per

year)


70

Includes

Standard RatedSupplies

Zero Rated Supplies

Deemed Suppliessuch as private use,business gift morethan RM500, etc.

Excludes

Exempt Supplies

Sale of CapitalAssets

Imported Services

Out of scope

Designated areas(sale in Labuan, Langkawi

& Tioman)

The determination of thresholdTaxable Turnover:

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Registration

• Liability to register is determined by

historical turnover (based on turnover of thecurrent month and the preceding 11 months)or

future turnover (based on turnover of the

current month and the next 11 months)

Apply within 28 days from the end of the

relevant month

Effective date of registration will be on the 1st

day of the following month

The determination of threshold:

Historical Method illustration (applicable after

appointed date)

Date of

registration

1/9/15

Last day to

notify and applyfor registration

Liable toRegister

28 Days

11 Monthspreceding

1/10/16

Period to notify28/9/16

31/8/16

First dayof 12

monthsperiod

1/8/16

Current month+

1/4/15

Appointed

Date

exceedthreshold

Registration

72


13/15

13

73

The determination of threshold

Future Method illustration (applicable after

appointed date)

28/9/15

Date of

registration

Last day to notifyand apply forregistration

Expected exceedthreshold in thenext 11 months

28 Days

Liable toregister

Current month

31/7/16

1/10/15

31/8/15Period to notify

exceedthreshold

11 Months succeeding+

1/8/15

First dayof 12

monthsperiod

1/4/15

Appointed

Date

Registration

74

Voluntary Registration

Businesses below threshold or businesses which have yet to

make or intend to make taxable supplies may apply forvoluntary registration:

Benefits:

• To recover input tax for start-up costs,

• To avoid giving the impression of small operation.

Once registered must remain in the system not less than 2

years.

Registration

75

Registration of Branches

• A registered person having branches/divisions may apply toregister its branches/divisions individually under the name of

those branches/divisions.

• Individual GST registration number given and submit GSTreturn separately to Customs.

• Registration of branches/divisions may be considered if: Making wholly taxable supplies;

Not a member of a group; Difficult to submit a single return for all branches;

Each branch maintain a separate account;

Separately identifiable by the nature of business or itslocation;

Every separately registered branches has the same taxableperiod.

• To determine the taxable turnover for GST registration purpose,taxable turnover of all branches has to be combined.

Registration

76

Eligibility

Each company must be making wholly taxable

supplies;

Each company must be GST registered individually;

Company holding more than 50% of the issued share

capital as having controlling power over the other

companies;

Treatment

• Members of group must nominate a member to be their

representative

• Registration of a group shall be in the name of the

representative member

• All members of the group shall be liable jointly and

severally for any tax due and payable by the


Group Registration

77

Group Registration

How to determine control?

A company, individual or partnership holds-- directly-- indirectly through subsidiaries or-- together directly or indirectly through

subsidiaries

more than 50% of the issued share capital of thesecond mentioned company

Who is not eligible as member of a group ?

Individual

Partnership Associate or affiliate company

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Group Registration

JM Berhad(Management

Company)

Syarikat A Bhd(Hotel &

Restaurant)

Syarikat B Bhd(Oil & Gas)

Syarikat C Bhd(Plantation)

Example of group registration

Companies JM, A, B and C are eligible to register as agroup even though they carry out diversified businessactivities

100% 75% 52%


14/15

14

79

Group Registration

XYZ Bhd

A Sdn Bhd

E Sdn Bhd

B Sdn Bhd

D Sdn BhdC Sdn Bhd

80% 40%

60% 55% 100%


B is not eligible to be a group member with XYZ and A.However, B, C, D and E can register as a group

80

Group Registration

Ali bin Ahmad

Syarikat MinyakMasak Sdn Bhd.

(A)

Syarikat MinyakGamat Sdn Bhd.

(B)

Syarikat MinyakAngin Sdn Bhd.

(C)

75%100% 51%


Companies A, B and C can form a group for GSTregistration purpose

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Group Registration

A & B Enterprise(Partnership)

C Sdn Bhd. D Sdn Bhd.

70%100%


Companies C and D can register as a group.

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Group Registration

XYZ Bhd

A Sdn Bhd B Sdn Bhd C Sdn Bhd

40%80% 52%

D Sdn Bhd

100%

Example of group control

XYZ has direct control over A and B, and also controls Dindirectly through B.

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Group Registration

Company A

Company B

80%

Company C

60%

48%

Example of group control

A has direct control over B but it has no control over C. If Aand B register as a group, C is not eligible to be a groupmember.

84

Group Registration

Nominate a member to be a representative member

Registration of a group will be in the name of the


Representative member to consolidate return and pay

tax for the group

All members of the group shall be jointly and severally

responsible for the payment of tax

Benefit of group registration

Supplies between group members is disregarded

Reduce GST compliance costs

Reduce cash flow problem


15/15

85

Offence & Penalty

Subject to lateregistration penalty onnumber of days late

Late registration periodis from the date heshould have beenregistered to the daybefore he is registered

Effective date ofregistration for lateregistration is the dateof application

Late

Registration

Period (Days)

Cumulative

(RM)

1 – 30 1500

31 – 60 3000

61 – 90 4500

91 – 120 6000

121 – 150 7500

151 – 180 9000

181 – 210 10500

211 – 240 12000

241 – 270 13500

271 – 300 15000

301 – 330 16500

301 - 360 18000

Exceeding 360 20000

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Offence & Penalty

Example:

Date exceeds thresho ld - 15 th May 2017

Liable to notify - 1 st June to 28 th Jun e 2017

Should be registered - 1 st July 2017

Apply for reg is trat ion - 1 st January 2018

Late registration period : 1 st July to 31 st Dec. (184 days)

Late registration penalty : RM 10,500.00

Registration

Responsibilities of a registered person:

Account for GST on taxable supplies made andreceived

Submit GST return and pay tax by due date

Issue tax invoice on taxable supplies made

Inform within 30 days from date of business

cessation

Inform changes of address, taxable activity,accounting basis and taxable period

Keep business records in BM or English for 7years

88

Royal Malaysian ustoms

Ministry of Finance

Malaysia

hank you

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