Join KF Cheong as he discusses the difference between service tax and GST on the real estate market in Malaysia. He will also be sharing on the margin scheme of GST for the real estate market covering on how GST will impact you as an agent as well as your buyers and investors with their property purchase or rental when GST kicks off on April 2015.

1. Difference between GST and Sales and
Service Tax(SST)
SST GST
 Service tax is a consumption
tax levied and charged on any
taxable services provided by
any taxable person
 Rate = 6% for service tax
 Sales tax is a single stage tax
imposed on taxable goods
manufactured locally and/or
imported
 Is a consumption tax levied
on any taxable goods and
services provided by any
taxable person
 Rate = 6% for standard rate
item
 GST is a multistage ie from
manufacturer to consumer

2. Difference between GST and Sales and
Service Tax(SST)
SST GST
 Rate of tax = 5% to 10% for
sales tax
 Threshold varies from RM0 to
RM3million for Service tax
and RM100,000 for Sales tax
 Single stage
 Rate of tax = 3 types
i) Zero rated (0%)
ii) Exempted
iii) Standard rated (6%)
 Threshold is RM500,000
 Multistage

3. Difference between GST and Sales and
Service Tax(SST)
SST GST
 Service tax is due when payment
is received for taxable services
rendered
 If payment is not received within
12 calendar months from the
date of issuance of invoice, the
tax is due on the day
immediately after the expiry of
the 12 months period.
 Is due on accrual basis and is
payable to the Custom at the end
of the following month after the
end of the taxable period.

4. Difference between GST and Sales and
Service Tax(SST)
SST GST
 Taxable period = Two calendar
months
 Can claim bad debts relief if
debtors failed to pay after one
year only for service tax
 Taxable period :-
i) Monthly= For Turnover
exceeding RM5million
ii) Quarterly= For Turnover less
than RM5million
 Can claim bad debts relief if
debtors failed to pay after 6
months

5. Difference between GST and Sales and
Service Tax(SST)
SST GST
 Cannot claim input tax as this is
single stage system
 Cannot claim refund
 Only apply to limited
professional services and
industries
 Can claim input tax if goods
supplied is Zero rated or
Standard rated
 Can claim refund if input tax is
more than output tax
 Apply to any goods and services
where the threshold is met

6. Impact on Real Estate Agents
 Estate Agent
a person licensed under Part VA of the Valuers, Appraisers and
Estate Agent Act 1981
an Authority of Practice has been issued by the Board of Valuers,
Appraisers & Estate Agents under Section 16 of such Act
provides services as he acts as a go-between for the owner and the
buyer
assisting with their negotiations to reach an agreed sales price for
the property
continue to follow up with the owner until the property is legally
transferred to the new owner
Such services = taxable supplies regardless whether the property
are commercial or non-commercial

7. Impact on Real Estate Agents
 Estate agents, negotiators or brokers
receives a payment known as a Commission from the
owner
Have to charge GST on the fee or commission in
relation to a property located in Malaysia
If property is located outside Malaysia = zero rated

8. Impact on Real Estate Agents
 Disbursements
 does not constitute a supply and is not subject to GST
provided the following circumstances are met:-
made by the person as an agent on behalf of the client
client actually received the goods & services
client is the person responsible to pay
payment is authorised by the client
client knew that the goods & services paid for is provided
by third party
payment is itemised
the person claims the exact amount from the client
payment is clearly additional to the supplies the person
makes to the client

9. Impact on Real Estate Agents
 Reimbursements
refer to the recovery of an expense that you incur
as a principal from another party
may be subjected to GST if it is a consideration for a
supply of goods or services
Eg. telephone, telex, postage, advertising,
stationery ,travelling and accommodation
GST registered valuer, appraisers of an estate
agents are entitled to claim input tax incurred for
the reimbursement

10. Impact on Real Estate Agents
 Tax Invoice
Section 33 of the Goods and Services Act 2014
every registered person who make any taxable supply
of goods & services
in the course of furtherance of business
in Malaysia
to issue a tax invoice within 21 days from the time of
supply

11. Impact on Real Estate Agents
 Example:
For real estate agent, where sale of property requires
consent from the State Government, the time of supply
starts when the consent is given.
Tax invoice is issued only within 21 days from the date
of consent.

12. Impact on Negotiators
• Negotiators
To register & charge GST if:
Income > RM500,000
Is on contract for services

13. Impact on Real Estate Agents
• What constitute taxable turnover?
All fees
Additional fee incurred by valuer ,appraisers/estate
agents (excluding disbursements)
Deemed supplies
Eg. private use of business assets and disposal of
business gifts, excluding disposal of capital assets
Private use means any amount exceeding RM500

14. Impact on Real Estate Agents
• However, Real estate agent involved in business and
selling properties or renting out their own property,
the taxable supplies will include:
Fees
Selling price of commercial properties held as
trading stock
Rental received from commercial properties

15. Transitional Provision
GST is payable on supplies of goods and services made on or
after 1 April 2015
If there is a continuous supply of services spanning the GST
commencement:
 Portion of supply made before 1 April 2015
= not subject to GST
 Portion of supply made on/after 1 April 2015
= subject to GST

16. Transitional Provision
For Estate Agent:
 must apportion their services and charge accordingly
 GST is only chargeable for such services rendered after
GST implementation (1 April 2015)
 Apportionment can be by way of time spent or
transaction of the services
Example:
If the rental of a shop starts from 15 March 2015 to 14
April 2015, only the portion of rental from 1 April to 14
April 2015 is subject to GST.

17. MARGIN SCHEME (MS)
 Why Margin Scheme?
 Normal rules, GST is charged on full value of taxable
supplies
Example:
Used car bought from an individual, and then sold to
another person.
 To avoid double taxation for taxable persons who
acquire second-hand goods where no tax was
previously charged on the acquisition.

18. MARGIN SCHEME (MS)
 How GST being impose under Normal rules?
Selling price Selling price
RM45,000 No GST RM50,000 *GST 6%=RM3,000
*GST= RM50,000 x 6%= RM3,000.00
Individual Second hand
Dealer
Individual
Registered person
Unregistered person

19. MARGIN SCHEME (MS)
 How GST being impose under Margin scheme?
 GST will be charged based on the margin
i.e. the difference between selling price and the purchase
price of the prescribed second hand goods
 If there is a difference (excess), the GST is to be treated
inclusive in the consideration
 If there is no excess, then there is no GST due and payable

20. MARGIN SCHEME (MS)
 How GST being impose under Margin scheme?
 Used goods must be acquired by the MS participants where no
GST chargeable on the acquisitions
Selling price Selling price
RM45,000 No GST RM50,000 *GST 6%=RM283.01
*Margin=RM5,000.00 (RM50,000 – RM45,000)
GST=RM5,000 x 6/106 = RM283.01
Individual Second hand
Dealer
Individual
Registered person
Unregistered person

21. MARGIN SCHEME (MS)
 How GST being impose under Margin scheme?
 GST on Margin can also be imposed by approved person under MS
to the other MS participants
Selling price Selling price Selling price
RM45,000 No GST RM50,000 *GST 6%=RM283.01 RM55,000 *GST 6%=RM283.01
*GST 6%=RM283.01
Individual Second hand
Dealer (MS)
IndividualSecond hand
Dealer (MS)
Individual

22. MARGIN SCHEME (MS)
 Section 60 - Relief for Second Hand Goods
Selling Price RM50,000 (inclusive of GST)
Cost Price RM45,000
Gross Margin RM5,000 [RM50,000 – RM45,000]
GST RM283.01 [RM5,000 x 6/106] (not to be shown on invoice)
Value of the
car
RM49,716.99 [RM50,000 – RM283.01] (Selling price less GST)
Output tax RM283.01
Input tax RM0.00 (no input tax claimable as no tax invoice is issued by the
seller)
Net GST RM283.01

23. MARGIN SCHEME (MS)
 Goods eligible for the relief are as follows:
 used motor vehicle after the implementation of GST
and include used motor vehicle which is subject to sales
tax whether on locally manufactured vehicle or
importation
 Taxable supply of land and property (Commercial and
Industrial) acquired after the implementation of GST

24. MARGIN SCHEME (MS)
 Who is eligible for the scheme?
 Any registered person who is involved in the
business buying and selling of second-hand motor
vehicles or real properties
Eg. Second hand car dealers and Real estate agents

25. MARGIN SCHEME (MS)
 How Margin Scheme Operates?
 Sales transaction to MS registrant
Seller Buyer
Individual
Non-registrant MS registrant
MS registrant
GST registrant
Scenario 1
A buyer who is GST MS registrant can purchase eligible goods from
individual, non-registrant, GST MS registrant or GST registrant.
No tax invoice is issued by the seller (i.e.GST is not chargeable on
the sale). No input tax to be claimed by the buyer.
The buyer will then have the choice whether he wants to apply the
margin scheme or not when he sells the goods.

26. MARGIN SCHEME (MS)
 Requirement under the Margin Scheme:
 Taxable person needs to apply for this scheme using the
special form
 Approval under this scheme is not subject to renewal
 The goods is allowed to be transacted under margin
scheme with acquisition made from:-
 Individual
 Non-registrant
 Registrant as regard to goods which fall under the block input tax
 Registrant person approved under the Margin Scheme (MS)

27. MARGIN SCHEME (MS)
 Requirement under the Margin Scheme:
 No tax invoice to be issued under this scheme and it is
an offence under Sec.33(8)
 If the buyer is a registered person, he is not entitled to
claim the input tax incurred on the acquisition
 Approved person has an option whether to impose GST
based on margin or according to the normal rules but
needs to issue tax invoice on the supply

28. MARGIN SCHEME (MS)
 Sales transaction by MS registrant
Seller Buyer
GST MS registrant individual
non-registrant
GST MS registrant
GST registrant
Scenario 2:
The seller can opt whether he wants to apply the margin
scheme or not when he sells the goods. If the seller sells the
goods using margin scheme, he will issue a normal invoice
and account for output tax based on the margin.

29. We are an Approved Auditors under Companies Act 1965
established in 1996 and Licensed Tax Agent under Section 153(3)
of the Income Tax Act 1967 and GST Tax Agent under Section 170
of Goods and Service Tax Act 2014.
Services provided:-
 Auditing
 Income Tax compliance
 Income Tax planning
 Accounting
 Company secretarial
 GST application
 GST returns
 GST planning & advisory
 GST training

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189 Jalan Tun Razak
50400 Kuala Lumpur
Tel : 03-21660198 / Fax : 03-21662198
Email : kinfongc@gmail.com
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