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

1. MALAYSIA
Goods & Services Tax
(GST)
Presented by : Vimmy Yap

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. OVERVIEW OF MALAYSIA GST
Goods and Services
Tax (GST)
6%
Sales and Service Tax
(SST)
10% & 6%

4. WEAKNESS OF SALES TAX

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. 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. 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. 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. Types of supply Output Tax Input Tax
Standard rated 6% Claimable
Zero rated 0% Claimable
Exempt No Non-claimable
MALAYSIA GST MODEL

10. STANDARD RATED SUPPLY

11. MALAYSIA GST MODEL

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. COMPUTATION OF GST
Input tax > Output tax = GST REFUND
Input tax < Output tax = GST PAYMENT

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. 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. 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. 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. IRAS Annual Report 2012/13,
appendix
18

19. ZERO RATED SUPPLY

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. EXEMPT SUPPLIES

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. 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. SCOPE AND CHARGE
Businesses with
turnover
≥ RM 500,000

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. 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. 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. 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.  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. 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

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

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. GST IMPACT ACROSS ALL BUSINESSES
GST
Information
System
Suppliers
Customers
Finance &
Admin
Internal /
Human
Capital
Strategy
Legal
Sales &
Marketing
Strategies

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. STAGES OF GST IMPLEMENTATION
1st stage :
Preliminary
Assessment
2nd stage:
GST Implementation
Strategy
Development
3rd stage:
Training and
test run

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. 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.  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. GST STEERING
COMMITTEES
Client GST
Team
GST
Professional
Team
GST
Software
Team
GST PROJECT TEAM

42. For more information : www.gst.com.my
E-mail : info@gst.com.my
Facebook : GSTconsulting