SCOPE AND CHARGE
GST shall be levied and charged on the taxable supply of goods and services made in the course or furtherance of business in Malaysia by a taxable person. GST is also charged on the importation of goods and services.
A taxable supply is a supply which is standard rated or zero rated. Exempt and out of scope supplies are not taxable supplies.
GST will replace the existing consumption tax comprising of sales tax and service tax (SST).
GST can only be levied and charged if the business is registered under GST. A business is not liable to be registered if its annual turnover of taxable supplies does not reach the prescribed threshold. Therefore, such business cannot charge and collect GST on the supply of goods and services made to their customers. Nevertheless, business can apply to be registered voluntarily.
TYPE OF SUPPLY
Standard –rated supplies are taxable supplies of goods and services which are subject to a proposed rate of 6%. A taxable person who is registered under GST has to collect GST on the supply and is eligible to claim input tax credit on his business inputs in making taxable supplies.
Exempt supplies are supplies of goods or services which are not subject to GST. In this context, businesses do not collect any GST on their supplies and are not entitled to claim credit on his business input.
Zero-rated supplies are taxable supplies of goods and services which are subject to GST at 0% rate. In this respect, businesses do not collect any GST on their supplies but are entitled to claim credit on inputs used in the course or furtherance of the business.
Supplies not within the scope of GST
Supplies not within the scope of GST
Supplies which do not fall within the charging provision of the GST Act include non-business transactions, sale of goods from a place outside Malaysia to another place outside Malaysia as well as services provided by the Government sector.
Businesses with annual sales turnover exceeding the indicative threshold of RM500,000 are liable to be registered under the GST.
The annual sales turnover can be determined based on either:
- the total value of taxable supplies of the current month and the previous 11 months, or
- the total value of taxable supplies of the current month and the next 11 month
You also need to decide on the type of registration best for your business:
- Voluntary Registration
- Group Registration
- Division/Branch Registration
Registration is not required for exempt supply and designated area
The registered person will be allocated monthly, quarterly and six months taxable periods according to the annual business turnover on the approval of GST registration :
Monthly for a person with turnover in excess of RM 5 million as well as export-based entities
Quarterly for a person with turnover of less than RM 5 million
Six monthly for others small businesses & seasonal sales
Submission of Returns and Payment of Tax
Every taxable person shall submit to the Director General of Custom a return not later than the last day of the following month after the end of the taxable period
Every taxable person shall keep the accounting records relating to GST for a period of seven years
Penalties will be incurred for late GST payment
|Tax remains unpaid||Rate of penalty||Cumulative|
|1 - 30 days||5%||5%|
|31 - 60 days||5%||10%|
|61 - 90 days||3%||13%|
|91 - 120 days||3%||16%|
|121 - 150 days||3%||19%|
|151 - 180 days||3%||22%|
|181 days or more||3%||25%|
Approved Trader Scheme (ATS)
- This scheme is provided to alleviate cash flow to the businesses.
- Any taxable person registered under the ATS will be allowed to suspend GST payable on imported goods at the point of importation.
- The GST suspended need to be declared and accounted for in the following taxable period.
Approved Toll Manufacturer Scheme (ATMS)
- This scheme is provided to disregard any supply made by the local toll manufacturers to the overseas clients.
- The toll manufacturers can apply for ATS facilities where GST on goods imported is allowed to be suspended for the purpose of toll manufacturing activities.
- When processed goods are delivered by the toll manufacturer on behalf of his overseas principal, the toll manufacturer need not account for GST on the local delivery. On the other hand, the local recipient needs to account for GST by way of “Recipient Accounting”
- In the case where the local recipient is a registrant, he needs to account for GST in his return.
- If the local recipient is a non registrant, he needs to account for GST in a special form.
- Supply of raw material or component made to overseas principal but delivered to the toll manufacturer is treated as zero rated supply.
Approved Jeweller Scheme (AJS)
- This scheme is to provide cash flow relief to a jeweller manufacturers.
- Supply of prescribed precious metals made by the gold bullion house or bank to a jeweller manufacturers is to be treated as disregarded supply.
- The approved jeweller manufacturers need to account for GST by way of “Recipient Accounting”.
- This scheme is provided to disregard supplies within a warehouse before the duty point and the last supply is subject to GST.
- GST payment on imported goods deposited into a warehouse or moved from one warehouse to another warehouse will be suspended.
- Goods released to local market to be subjected to GST.
- Goods released to overseas market (export) to be zero- rated.
- All goods and services consumed in the warehouse to be standard-rated.
- This scheme is also applicable to inland clearance depot (ICD) and duty free shop.
Flat-Rate Scheme (FRS)
- This scheme is to allow certain category of approved sectors (e.g. example farmers) to get some form of compensation of the GST paid on their inputs even though they are not GST registrant.
- Farmers will charge a flat rate addition to the businesses.
- Farmers can keep the flat rate addition collected and do not have to submit the return.
- Farmers are not allowed to claim input tax credit.
- The buyer can claim input tax credit on the flat rate addition paid to the farmer and must be supported by invoice.
Tourist Refund Scheme (TRS)
This scheme allows tourists to claim GST paid on goods purchased and brought back to their respective countries by air mode only.
Who are entitled to claim for GST refund under TRS
- Foreign tourist (neither a citizen nor a permanent resident of Malaysia).
- Not a member of the cabin or flight crew of the aircraft leaving Malaysia.
- Students entering or staying in Malaysia on a student pass subject to condition that the goods are taken out of Malaysia within 3 months from the date of purchase.
- A foreign diplomat departing from Malaysia permanently subject to condition that the goods are taken out of Malaysia within 3 months from the date of purchase or completion of service.
What are the goods that qualify for claim under TRS
Claims for refund can be made on all goods for which GST has been paid with the exception of the following:-
- Wine, spirits, beer and malt liquor.
- Tobacco and tobacco product.
- Jewellery, precious metal and gems stone.
- Goods consumed in Malaysia wholly or partially.
- Goods consumed in Malaysia wholly or partially.
Where to claim for GST refund
All claims can be made from refund agents located at the Malaysian International Airports.
When to claim
Upon leaving Malaysia by air mode only.
How to claim for the GST refund
- The goods is purchased at the approved TRS outlets.
- Must hold a valid tax invoice endorsed by the operators of the TRS outlets.
- Spend at least RM300.00 at any approved outlet.
- Depart with the goods through any international airport within 3 months from the date of purchase.
Verification by customs
- The goods must be presented for certification by the customs officers at the airport located in the departure lounge after immigration clearance.
- For bulky item which need to be packed and checked in as luggage, the goods must be presented for certification by customs at the GST Refund Inspection Counter located in the departure hall before the check in.
Submission of claim
- The application form can be obtain from the Customs Inspection Counter located in the departure hall before the check in or at the TRS refund agent at the airport or at any approved TRS outlet.
- The complete application form has to be submitted to the TRS refund agent located in the departure lounge after immigration clearance.
- Claim can be made after departure from Malaysia by mailing the endorsed refund form within 2 months from date of endorsement.
Mode of refund
- Cash refund for claim below RM300.00
- For claim exceeding RM300.00, the refund can be made through following option:-
- Bank cheque
- Credit card account
- Bank account
- FAQs on GST for Tourists
- Group registration is a facility that allows several companies to group and centralize their administration for the GST accounting purpose.
- Each company must be registered individually before they can be grouped as a single registered person and each company must be making wholly taxable supply.
- Companies are eligible for group registration if one company controls another company. One company is taken to control another company if the first mentioned company holds directly, indirectly through subsidiaries or together directly or indirectly through subsidiaries more than 50% of the issued share capital of the second mentioned company.
- One of the members has to be nominated by the group as the representative member of the group.
- Any taxable supply made by or to a member of the group shall be treated as a supply by or to the representative member.
- Supplies between group members would be disregarded as a supply.
Transfer of business as a going concern (TOGC)
- TOGC is a facility provided to both the transferor and transferee involved in the transfer or sale of business as a going concern.
- TOGC may involve the transfer of a whole or part of a business as a going concern from a taxable person to another taxable person and carry on the same business.
- If only part of the business is transferred, that part of the business must be able to operate on its own.
- When a supply of business assets is made as TOGC, such supply of assets by a taxable person (transferor) to another taxable person (transferee) is treated as neither a supply of goods nor a supply of services.
- The transferee need not have to pay output tax on the transferred assets and the transferor does not have to account for output tax on the transferred assets.
- Capital goods shall include all goods that can be capitalized under generally accepted accounting principles as their business asset and used by a person in the course or furtherance of a business.
- If the capital goods are used wholly to make a taxable supply, the amount of ITC can be claimed in full except on blocked input. However, if the capital goods are used to make a mixed supply, the amount of ITC has to be apportioned accordingly based on the percentage value attributable to the taxable supply.
- Adjustment to the input tax that has already been claimed should be repaid if the taxable use decreases over a period. On the other hand, if taxable use increases, a further amount of input tax can be claimed.
- The period of adjustment shall consist of
- 10 years for land and building
- 5 years for any capital item other than land and building
Second-Hand Goods Scheme
- A special GST treatment to allow businesses to charge and account GST on the positive price margin from the sales of the second-hand goods.
- This scheme which is called “Margin Scheme” to be applied only for goods (motor vehicle and commercial property only) purchased from non-registered person and resold.
- By imposing GST on the margin, this scheme avoids the second-hand goods from being taxed twice (double taxation) as the GST already embedded in the second-hand goods will be ignored.
- This scheme is not applicable for second-hand goods purchased from a taxable person unless he is participant of Margin Scheme.
- Example of calculation:
Vouchers / Stamps / Tokens
- Vouchers, stamps and tokens can be categorized either as monetary vouchers or non-monetary vouchers.
- Monetary vouchers (face-value) are treated as a medium of exchange, and therefore the supply of monetary vouchers is disregarded as a taxable supply. However, if the voucher is sold for more than the face value, the taxable person must account for GST on the excess amount. When the monetary vouchers are redeemed, the taxable person supplying the goods or service must account for GST.
- The sale or issuance of non-monetary vouchers (non-face value and include discount vouchers) are regarded as a taxable supply and GST should be accounted for at the time the vouchers are sold or issued. When non-monetary vouchers are redeemed they are disregarded as a supply.
- If goods and services acquired are given as a benefit to employees, it is considered as used for business purposes. Therefore, the employer needs to account for GST on the supply. However the businesses can claim any relevant input tax incurred. In the case where services are given free to the employees (e.g. free laundry services) no GST is due because free service is not regarded as a supply. Value of the fringe benefit given is based on the open market value.
- In the case of fringe benefit where the input tax is blocked or not claimable, no GST is due when it is given as a fringe benefit to the employees.
- Supply made by or to an agent acting on behalf of a principal shall be deemed to be made by the principal. The principal will have to account for GST on the supplies, whilst the agent needs to account for GST on his agent’s fees or commission.
- Supply made through an agent acting in his own name, the supply shall be treated as a supply made by the agent himself and need to account for GST on the supplies.
- If an agent acts on behalf of an overseas principal (non-resident), the supply shall be deemed to be made by the agent. The agent is required to register an account for GST separately in the name of non-resident.
- When goods are imported and supplied by a GST registered agent on behalf of a non-taxable person, the goods shall be deemed to be imported and supplied by the agent.
- The supply made by a principal to the auctioneer shall be disregarded as a supply.
- Subsequent supply by the auctioneer shall be treated as a supply made by the principal and the auctioneer shall be liable to account and pay GST on the supply.
- Auctioneers’ fees or commissions charged to the principal are subject to GST if he is a taxable person.
- Where goods are repossessed from a taxable person and subsequently sold by the repossessor for the purpose of recovering any debt due, the goods shall be deemed to be supplied by the taxable person and shall be disregarded for GST purposes.
- The repossessor whether or not is registered should account for the output tax on the sale of the repossessed goods.
- The repossessor is only eligible to claim input tax credit incurred in the act of repossession (such as storage, transport, advertisement and etc).
Designated Area (DA)
Designated area refers to the free ports of Langkawi, Labuan and Tioman. GST treatment on the supply of goods and services in the DA:
- Supplies within DA and between DA are disregarded for GST purposes.
- Goods supplied from DA to Malaysia are subject to GST (treated as import). However, goods supplied from Malaysia to DA is to be zero rated except otherwise prescribed by the Minister.
- Taxable supply of services from DA to Malaysia or Malaysia to DA is to be standard rated.
- No tax is chargeable on the importation of goods or supply of imported services into the DA except otherwise prescribed by the Minister.