2013 GST Consultant Brownbeg

3 PARTS:
An Overview of GST
GST Impact to an
Organization/ Businesses
GST Consultant Course
19 May 2013 - Felda Residence

Hot Spring
GST in Malaysia
Part
An Overview of GST

Hot Spring
GST in Malaysia
1
2
An Overview of GST
DIRECT TAX
1.
2.
3.
4.
5.
6.
Corporate Tax;
Individual Income Tax;
Stamp Duty;
RPGT;
Petroleum Income Tax;
Cooperative and others;

Hot Spring
INDIRECT TAX
1.
2.
3.
4.
5.
6.
GST in Malaysia
Import Duty;
Export Duty;
Excise Duty;
(fuels, tobacco, alcohol)
Sales Tax;
Service Tax;
Windfall Profit Tax;
(excessive profits)
An Overview of GST
Cukai
Perkhidmatan
Cukai Jualan
Tahun Diperkenalkan
Sales Tax Act 1972
Service Tax Act 1975
Skop Pengenaan
Barang terpilih;
Diperingkat pengilang;
Perkhidmatan terpilih;
Kadar
5%;
10%;
Petroleum;
6%;
Kad kredit;
Kemudahan
Perolehan barang
mentah tanpa cukai
jualan
Nilai Ambang/
Threshold
19
May 2013 - Felda Residence
RM100,000
Sifar hingga RM3 juta;
Hot Spring
GST in Malaysia
Hotel/ hospital persendirian

perkhidmatan akauntan,
peguam, jurutera, arkitek,
kiriman cepat, jurukur dan
penilai, pengawal/
perlindungan keselamatan,
pekerjaan pusat-pusat servis
dan membaiki kenderaan
bermotor, ruang letak kereta,
ejen-ejen penghantaran,
pengiklanan, klinik veterinar,
telekomunikasi, insuran,
kereta sewa dan firma-firma
khidmat perunding,
perkhidmatan pengurusan dll
An Overview of GST
VAT/GST
Country
Rate
Year
Korea
10%
Indonesia
10%
Taiwan
5%
New Zealand
12.5%
Philippines
10% 12%
Japan
5%
Thailand
7% 10%
China
17%
Singapore
3 % 7%
Cambodia
10%
Vietnam
10%
Australia
10%
India
16%
Malaysia
4% (?)
Hot Spring
Dec 1976
April 1985
Nov 1985
Oct 1986
Jan 1988
Apri1989
Jan 1992
Jan 1994
Apr 1994
Jan 1999
Jan 1999
Jul 2000
Oct 2010
2014 (?)
Country
U/Kingdom
Germany
17.5%
19%
France
19.6%
Belgium
21%
Brunei, Malaysia and Myanmar

GST in Malaysia
Rate
VAT/GST??
An Overview of GST
Need for GST
Sebagai langkah penyusunan semula struktur percukaian
negara;
Terdapat kelemahan dalam sistem cukai jualan dan
perkhidmatan;
Hasil negara terlalu bergantung kepada cukai pendapatan
dan cukai petroleum;

Hot Spring
GST in Malaysia
An Overview of GST
Need for GST
GST merupakan sumber hasil yang lebih stabil berbanding hasil
daripada cukai pendapatan;
Cukai dipungut berasaskan kepenggunaan;

(tidak dipengaruhi oleh faktor luaran seperti kelembapan
ekonomi)
GST merupakan sistem percukaian yang lebih efisien dan efektif;
Kaedah perakaunan sendiri;
Mempunyai sistem semakan bersilang;
Meningkatkan pematuhan cukai;
Mengurang karenah birokrasi;
Sektor ekonomi yang terselindung akan terdorong untuk menyertai
GST;
Cukai ke atas input perniagaan dapat dituntut;
Hot Spring
GST in Malaysia
An Overview of GST
Need for GST
GST adalah cukai kepenggunaan yang dikenakan ke atas

nilai ditambah;
GST juga Dikenali sebagai Value Added Tax (VAT);
Peniaga dibenarkan menuntut kembali GST yang dibayar ke

atas input perniagaan (cukai input);

Hot Spring
GST in Malaysia
An Overview of GST
Need for GST

Hot Spring
GST in Malaysia
An Overview of GST
GST Mechanism
INPUT
OUTPUT
Bahan Mentah
Sewa
Barang
Peniaga
Perkhidmatan
Telefon
GST Cukai Input

Hot Spring
Hanya Bayar
Cukai Bersih
=
Output - Input
GST in Malaysia
GST Cukai Ouput
10
GST Mechanism
An Overview of GST
GST @ 4%
Price: RM 10
GST: RM 0.40
Price: RM 50
GST: RM 2.00
Price: RM 60
GST: RM 2.40
Tax remitted to Customs

Supplier
Manufacturer
Retailer
Consumer

Hot Spring
Output tax =
RM 0.40
Output tax =
Input tax =
RM 2.00
RM 0.40
RM 1.60
Output tax =
Input tax =
RM 2.40
RM 2.00
RM 0.40
Total amount remitted to

Customs = RM 2.40
GST in Malaysia
11
An Overview of GST
GENERAL CONCEPTS
Output tax
OUTgoing invoice Sale OUTput Tax
Input tax
INcoming invoice Purchase INput Tax
Difference = Amount payable to / refundable by Customs( 14 /

28 days)
GST is a tax on final consumer. It is not a cost to the

Intermediaries.
It does not appear as an expense item in the financial

statement of the intermediaries.

Hot Spring
GST in Malaysia
12
An Overview of GST
Kadar GST
Cukai Output
Cukai Input
Kadar Standard
4%
Boleh
dituntut kembali
Kadar Sifar
0%
Boleh
dituntut kembali
Tiada GST
Tidak boleh
dituntut kembali
Dikecualikan

Hot Spring
GST in Malaysia
13
An Overview of GST
GST Pada Kadar STANDARD 4%

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GST in Malaysia
14
An Overview of GST
GST Pada Kadar SIFAR 0%

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GST in Malaysia
15
An Overview of GST
GST Pada Kadar SIFAR 0%

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GST in Malaysia
16
An Overview of GST
GST Pada Kadar DIKECUALIKAN

Hot Spring
GST in Malaysia
17
An Overview of GST
GST Pada Kadar DIKECUALIKAN

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GST in Malaysia
18
An Overview of GST
GST BASIC CONCEPTS
1
2
3
4
TYPE of supply
Are my outputs taxable?

Standard rate or zero rate
Exempt
Out-of-scope
Is my input tax recoverable?
PLACE of supply
Is my supply made in
Malaysia?
Territorial scope of GST
TIME of supply
When do I account for GST?
VALUE of supply

Hot Spring
At what value should I charge

GST?
GST in Malaysia
19
Part
GST Impact to an Organization

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GST in Malaysia
2
20
GST Impact To Organization

Impact on stakeholders
Stakeholders
Impact of GST
Shareholders
Erosion of profits
Employees
Benefits, remuneration, ways of working, processes and

infrastructure. Block inputs and BIK subject to GST.
Suppliers
Education to ensure GST benefits are passed on
Subsidiaries
Education and GST registration
Customers
Prospect of increase in price
Management
- Implementation costs and disruption of business

- Tight timelines
Others
May become apparent throughout the implementation

process

Hot Spring
GST in Malaysia
21

GST impacts EVERY aspect of BUSINESS
Education and
communication
Finance
Financeand
and
Administration
Administration
Impact on cash flow

Identification of transaction
and GST liability
Maximisation of input tax credit: GST invoice based
- no invoice no claim
Human
Human
Capital
Capital
Information
Information
Technology
Technology
Sales and
Marketing
Goods & Services

Tax
(GST)
Systems changes
for GST compliance
Accountability
Accountability
Registration & Compliance
Cancellation of sales tax / service
tax licences potential audit ?
Business
efficiency
Group structure
review
Effect on demandYou may need to do

some study
Pricing strategies Will
price remain the
same?
Impact on current
contracts
Procurement
Indirect tax exemption /
trade facilities GST
payments on purchases
Preferential vendors
under GST To maximize
input tax credit claim
Slide 22

INPUT
Raw Materials
4%
Services
4%
Capital Assets
4%
(Local or Imported)
Salaries
Out of Scope

Hot Spring
OUTPUT
Sales
(Local or Export)
Cash flow Impact;

GST on accrual basis.
i.e. If customers dont pay,
still need to pay the GST.
GST in Malaysia
23

Longer term supply contracts
e.g.
- Rental of warehouse
- Supply of finished goods
- Maintenance Contract
If the term cross over to GST regime who will bear

the GST on these contracts

Hot Spring
GST in Malaysia
24

Before GST
A
(1)
Sales Tax
Licensed
Manufacturer
(2)
Trading
Company
End Customer
(1) A & B are related companies

(2) A charges sales tax on sales to B
(3) No sales tax on sales to and customer.
After GST
(3) Cashflow Impact
(3) Cashflow Impact
(1)
(2)
End Customer
(1) A charges GST on sales to B;

(2) B charges GST on sales to end customer;
(3) Cash flow impact to A & B as they need to charge & collect GST for the Govt;
Hot Spring
GST in Malaysia
25

SPECIFIC ISSUES
Industry Specific Issues
Apportionment
Input tax credits
Contracts
Fixed price, reviewable and timing of supply rules
Grouping
Inter-company charges to be disregarded
Capital goods / raw materials
Cash flow management
Transitions stocks in hand
Sales tax refund
Human resource
Fringe benefits

Hot Spring
GST in Malaysia
26
GST Impact To
Organization
Companies providing mixed
supplies such as banks,
property developers,
education, hospitals, life
insurance
The need to attribute and
apportion input tax
credit according to
taxable and exempt
supplies
Banks proposal for fixed
rate of recovery

Hot Spring
Input tax credit - mixed supplies
ITC claim on residual =

Total value of
taxable supplies
Total value of all
supplies (taxable &
exempt)
GST in Malaysia
GST incurred on
residual inputs
27
GST Impact To
Organization
REGISTRATION
Mandatory when turnover
> prescribed threshold
Voluntary registration
stay registered for 2 years
Group registration
Divisional / branch
registration
Pre-registration exercise
6 months before GST
appointed date

Hot Spring
ACCOUNTING
Taxable period
quarterly (turnover not > RM5 mil)
monthly (turnover > RM5 mil,
export based trader)
six monthly (special case)
Tax invoices
format legislated
simplified tax invoice for total
value (including GST) < RM500
self-billed
Filing of returns
Not later than last working day of
the month following the end of
the taxable period
Payment of tax due to be made
together with return
GST in Malaysia
28

Offence & Penalty
Fine < RM50K; or
Imprisonment < 3 years
or both;
Late Registration:
1-30 days
31-60 days
61- 90 days
91-120 days
121-150 days
151-180 days
>181 days
Hot Spring
GST in Malaysia
5%
5%
3%
3%
3%
3%
3%
5%
10%
13%
16%
19%
22%
25%
29
Part
GST Consultant

Hot Spring
GST in Malaysia
3
30
GST Consultant 13 days with 500 pages note

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
INTRODUCTION, GST MECHANISM & TYPES OF SUPPLY;

REGISTRATION ;
TAX INVOICES;
DECLARATION AND PAYMENT BY OTHER TAXABLE PERSON ;
PENALTY FOR LATE PAYMENT;
TRANSITIONAL RULES;
INPUT TAX CREDIT ;
SPECIAL SCHEME ;
SPECIAL TRANSACTIONS ;
ACCOUNTING FOR GST/ ADJUSTMENT FOR CN/ DN/ BD RELEIF ;
PARTIAL EXEMPTION AND ANNUAL ADJUSTMENT ;
CAPITAL GOOD ADJUSTMENT (CGA) ;

Hot Spring
GST in Malaysia
31

Hot Spring
GST in Malaysia
32

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GST in Malaysia
33
Zero-rated supplies Proposed

International passenger
transport
(including domestic leg)
Supplies from PCA
to FCZ / Free Port
(Langkawi, Labuan
and Tioman)
International freight
transport
(excluding domestic leg)
Zero-rated
supply
Basic food for

human
consumption
Export of goods
Electricity
(1st 200 units for
domestic users)
Water
(1st 35 m3 to
domestic users)
International /
Exported Services
Slide 34
Exempt supplies proposed

Public supplies by local
authorities (legal, nonbusiness character)
Education services
& related services
Healthcare services by
government and private
hospitals & clinics
Quit rent by Federal

& State Government
Subscriptions by
member of nonprofit entity
Sale, lease or rental
of residential houses
All supply by Federal &
State Government
(except water)
Toll
Operators
Sale, lease or rental of

certain types of
residential land
Exempt
supply
Mass public transport of

passengers (domestic)
Financial services and
investment transactions
Life insurance, investment

Granting of Land linked and reinsurance
by State
Government
Slide 35
General concepts
Output tax
OUTgoing invoice Sale OUTput Tax
Input tax
INcoming invoice Purchase INput Tax
Difference = Amount payable to / refundable by Customs( 14 /

28 days)
GST is a tax on final consumer. It is not a cost to the

Intermediaries.
It does not appear as an expense item in the financial

statement of the intermediaries.

Hot Spring
GST in Malaysia
36
GST how does it work?

GST @ 4%
Price: RM 10
GST: RM 0.40
Price: RM 50
GST: RM 2.00
Price: RM 60
GST: RM 2.40
Tax remitted to Customs

Supplier
Manufacturer
Retailer
Consumer

Hot Spring
Output tax =
RM 0.40
Output tax =
Input tax =
RM 2.00
RM 0.40
RM 1.60
Output tax =
Input tax =
RM 2.40
RM 2.00
RM 0.40
Total amount remitted to

Customs = RM 2.40
GST in Malaysia
37
Importation of goods
GST
Sales tax
Overseas
Supplier
Overseas
Supplier
Tax remitted
to Customs
Price: RM100
Import GST: RM4
Price: RM100
Import sales
tax: RM10
Import GST: RM4
Malaysian
Importer/
trader
Malaysian
Importer/
trader
Price: RM200
Sales tax: Nil
Value add: RM100
Price: RM200
GST: RM8
Value add: RM100
Customer
Customer
RM4
ITC: RM4
RM4
Output tax: RM8
RM8
Assumption:
- sales tax rate is 10% and GST is 4%
Hot Spring
GST in Malaysia
38
Imported services for business

purpose by & to business-recipient
GST
Reverse
charge
Overseas
Supplier
Tax remitted
to Customs
Price: RM100
Output tax: RM4
Malaysian
businessrecipient
Price: RM200
GST: RM8
RM0
ITC : RM4
RM8
Output tax: RM8
Customer
RM8
Assumption: GST is 4%
Hot Spring
GST in Malaysia
39
Scope of charge
GST will be imposed:
ON a Taxable Supply
BY a Registered Person
IN the course or furtherance of any business
FOR business carried on in Malaysia
ON imported goods and services

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GST in Malaysia
40
Meaning of Supply
Anything done for a consideration
such as sale, transfer, barter,
exchange, licence, rental and etc
Supply
Deemed supply
Supplies done without consideration
Examples:
business assets put to private or non-business use
gifts
employee fringe benefits

Hot Spring
GST in Malaysia
41
GST basic concepts
1
2
3
4
TYPE of supply
Are my outputs taxable?

Standard rate or zero rate
Exempt
Out-of-scope
Is my input tax recoverable?
PLACE of supply
Is my supply made in Malaysia?

Territorial scope of GST
TIME of supply
VALUE of supply

Hot Spring
When do I account for GST?
At what value should I charge

GST?
GST in Malaysia
42
Types of Supply
Taxable
Supply
Standard-rated supply
Input tax is recoverable
Zero-rated supply
Non-taxable
Supply
Exempt supply
Input tax is not recoverable
Out-of-scope
Slide 43
Place of Supply
General rule
Place of supply in Malaysia if:

Supply of services made by supplier who has:
business establishment in Malaysia; or
fixed establishment in Malaysia; or
usual place of residence in Malaysia.
The goods are located in Malaysia at the time

when the goods are removed or made
available to the customer
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GST in Malaysia
44
Exported services / International

services
Zero-rated:
Services wholly performed outside Malaysia
Services supplied directly in connection with land
situated outside Malaysia
Services relating to export of goods
Services which directly benefit a foreign person, who is
outside Malaysia when services are performed. Cannot
be linked to land or goods situated in Malaysia.

Hot Spring
GST in Malaysia
45
Time of supply
- General rule
Earlier of the following dates:

1
When goods are

removed or
made available, or
when the services
are performed
or
Receipt of
payment
or
Issuance of
tax invoice*
(*) 21 day rule if invoice is issued within 21

days from (1) and no payment received, date
of invoice is taken as time of supply
Hot Spring
GST in Malaysia
46
Time of supply
- General rule
ILLUSTRATION
21 September
1 October
9 October
PAYMENT
Goods moved or
Services performed
BASIC TAX
POINT

Hot Spring
Tax invoice issued

(within 21 days)
ACTUAL TAX POINT
GST in Malaysia
Tax invoice issued

(after 21 days)
47
Value of supply
- General rule
Value of supply = Consideration GST

(when consideration is not in monetary terms or not wholly
consisting of money, the Open Market Value (OMV) to be
used)
Value of goods includes excise duty, if applicable
Imported goods
value = CIF value + customs duty + excise duty

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GST in Malaysia
48
Claiming ITC
To claim the input tax credits for any GST paid on
purchases for the purpose of making a taxable
supply, the prerequisites are:
Claimant must be a GST-registered person

Valid tax invoices for purchases
Tax invoices on purchases in the name of claimant
Goods and services are acquired for making taxable
supplies
Apportionment rules to be applied in cases of mixed supplies
Goods/services acquired are not subject to blocked ITC

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GST in Malaysia
49
Blocked ITC
Cannot claim ITC
Proposed blocked ITC:
Passenger motor car
Club subscription fee
Medical and personal accident insurance
premium
Medical expenses
Family benefits
Entertainment expenses except for employees

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GST in Malaysia
50
Input tax credit (ITC)

Time limit (from date of return) for ITC claim 6 years
Any refund may be offset against other unpaid GST,
customs and excise duties
Refund - 14 days (e-filing) to 28 days (manual)

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GST in Malaysia
51
Input tax credit apportionment rules

Input tax attributable to taxable supplies are wholly recoverable
and non-taxable supplies are not recoverable
Input tax not attributable to either taxable or non-taxable supplies,
or, either business or non-business use, an apportionment rule shall
apply:
ITC claim on residual

Hot Spring
Total value of
taxable supplies
Total value of all
supplies
(taxable & exempt)
GST in Malaysia
GST incurred on
residual inputs
52
Incidental financial supplies

For companies making wholly taxable supplies, the following
EXEMPT supplies will be regarded as TAXABLE supplies:
Deposit of money
Exchange of currency
Issuance of equity security or debt security
Provision of loan, advance or credit to employees or
connected person

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GST in Malaysia
53
Bad debt relief

Conditions:
Tax is already paid;
Whole or part of the consideration has been written off as bad
debts;
Payments not received payment or part payment 6 months
from date of supply; and
All reasonable efforts have been made to recover the debt

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GST in Malaysia
54
Capital goods
Standard-rated
One-off claim of input tax allowed (except for blocked
inputs)
Input tax apportionment necessary where capital goods
are used for both taxable and non-taxable supply
Input tax to be adjusted when ratio of usage changes
Intangible assets treated as out-of-scope supply (e.g.
goodwill)

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GST in Malaysia
55
Registration
Mandatory when turnover > prescribed threshold
Voluntary registration stay registered for 2 years
Group registration
Divisional / branch registration
Pre-registration exercise 6 months before GST appointed date

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GST in Malaysia
56
Accounting
Taxable period
quarterly (turnover not > RM5 mil)
monthly (turnover > RM5 mil, export based trader)
six monthly (special case)
Tax invoices
- format legislated
- simplified tax invoice for total value (including GST) <
RM500
- self-billed
Filing of returns
Not later than last working day of the month following
the end of the taxable period
Payment of tax due to be made together with return

Hot Spring
GST in Malaysia
57

Hot Spring
GST in Malaysia
58

2013 GST Consultant Brownbeg

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3 PARTS:

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

Sales Tax Act 1972

Service Tax Act 1975

Sifar hingga RM3 juta;

Hotel/ hospital persendirian

Brunei, Malaysia and Myanmar

19 May 2013 - Felda Residence

Cukai dipungut berasaskan kepenggunaan;

GST adalah cukai kepenggunaan yang dikenakan ke atas

GST juga Dikenali sebagai Value Added Tax (VAT);

Peniaga dibenarkan menuntut kembali GST yang dibayar ke

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

GST Cukai Input

19 May 2013 - Felda Residence

GST Cukai Ouput

Tax remitted to Customs

19 May 2013 - Felda Residence

Total amount remitted to

Difference = Amount payable to / refundable by Customs( 14 /

GST is a tax on final consumer. It is not a cost to the

It does not appear as an expense item in the financial

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

19 May 2013 - Felda Residence

Are my outputs taxable?

When do I account for GST?

19 May 2013 - Felda Residence

At what value should I charge

19 May 2013 - Felda Residence

GST Impact To Organization

Benefits, remuneration, ways of working, processes and

Education to ensure GST benefits are passed on

Education and GST registration

Prospect of increase in price

- Implementation costs and disruption of business

May become apparent throughout the implementation

19 May 2013 - Felda Residence

GST Impact To Organization

Impact on cash flow

Goods & Services

Effect on demandYou may need to do

GST Impact To Organization

19 May 2013 - Felda Residence

Cash flow Impact;

GST Impact To Organization

If the term cross over to GST regime who will bear

19 May 2013 - Felda Residence

GST Impact To Organization

(1) A & B are related companies

(3) Cashflow Impact

(3) Cashflow Impact

(1) A charges GST on sales to B;

GST Impact To Organization

Input tax credits

Fixed price, reviewable and timing of supply rules

Inter-company charges to be disregarded