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The Implementation of Goods and Service Tax (GST) Malaysia

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Exabytes eCommerce Conference 2014
The Implementation of Goods and Service Tax (GST) Malaysia by Vimmy Yap (GST Vintage Sdn Bhd)

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The Implementation of Goods and Service Tax (GST) Malaysia

  1. 1. MALAYSIA Goods & Services Tax (GST) Presented by : Vimmy Yap
  2. 2. VAT/GST in ASEAN countries Country Year Initial Rate (%) Current Rate (%) Registration Threshold (National currency) Registration Threshold (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
  3. 3. OVERVIEW OF MALAYSIA GST Goods and Services Tax (GST) 6% Sales and Service Tax (SST) 10% & 6%
  4. 4. WEAKNESS OF SALES TAX
  5. 5. OVERVIEW OF GST Malaysia GST :-  Implementation date : 1st April 2015  Rate fixed at 6%  Broad based consumption tax  Multi-stage tax  Self monitor system
  6. 6. 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.
  7. 7. 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.
  8. 8. 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
  9. 9. Types of supply Output Tax Input Tax Standard rated 6% Claimable Zero rated 0% Claimable Exempt No Non-claimable MALAYSIA GST MODEL
  10. 10. STANDARD RATED SUPPLY
  11. 11. MALAYSIA GST MODEL
  12. 12. Cos t + 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%)
  13. 13. COMPUTATION OF GST Input tax > Output tax = GST REFUND Input tax < Output tax = GST PAYMENT
  14. 14. 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
  15. 15. GST REFUND Refund of input tax  Within 14 working days for online submission  Within 28 working days for manual submission from 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
  16. 16. 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
  17. 17. Tax Remains Unpaid Date Rate 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
  18. 18. IRAS Annual Report 2012/13, appendix 18
  19. 19. ZERO RATED SUPPLY
  20. 20. 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
  21. 21. EXEMPT SUPPLIES
  22. 22. EXEMPT SUPPLIES Goods  land used for residential or agricultural purposes or general use (burial ground, playground or religious building)  building used for residential purposes.
  23. 23. 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
  24. 24. SCOPE AND CHARGE Businesses with turnover ≥ RM 500,000
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29.  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
  30. 30. 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. 31. 31
  32. 32. 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. 33. 33
  34. 34. KEY FOCUS FOR SUCCESSFUL GST IMPLEMENTATION People TechnologyProcess  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
  35. 35. GST IMPACT ACROSS ALL BUSINESSES GST Information System Suppliers Customers Finance & Admin Internal / Human Capital Strategy Legal Sales & Marketing Strategies
  36. 36. 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 by GST.com.my  Stage 1 : Preliminary Assessment  Stage 2 : GST Implementation Strategy Development  Stage 3 : Training & Test Run GST Implementation Challenges
  37. 37. STAGES OF GST IMPLEMENTATION 1st stage : Preliminary Assessment 2nd stage: GST Implementation Strategy Development 3rd stage: Training and test run
  38. 38. 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
  39. 39. 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
  40. 40.  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.
  41. 41. GST STEERING COMMITTEES Client GST Team GST Professional Team GST Software Team GST PROJECT TEAM
  42. 42. For more information : www.gst.com.my E-mail : info@gst.com.my Facebook : GSTconsulting
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Exabytes eCommerce Conference 2014 The Implementation of Goods and Service Tax (GST) Malaysia by Vimmy Yap (GST Vintage Sdn Bhd)

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