GST BRIEFING ORGANISED BY MALAYSIAN INSTITUTE OF CHARTERED SECRETARIES AND. ‘ADMINISTRATORS (MAICSA) Annie Thoma Arsistant Diroctor of Custonne March 2014 Venue: Mid Valley PROPOSED GST MODEL BASIC ELEMENTS OF GST REGISTRATION FOR GSTWHY GST? i Why GST? "WHY GST? Part of the government's tax reform programme Weaknesses of sales tax and service tax ‘Make the taxation system more effective, efficient, business friendly, transparent and capable of generating a more stable source of revenue > effective ¥ self policing ¥ In-build cross checking features Y able to address inherent weaknesses of the current sales tax and service tax > efficient Y less bureaucracyWHY GST? business friendly ¥ availability of various schemes ¥ reduce business cost v > transparent ¥ GST will be shown on the invoice ¥ public ruling > capable of generating a more stable source of revenue ¥ not susceptible to economy downturn (unlike income tax), ~ reduce reliance on direct taxes ¥ depleting resource (petroleum) spac eect lure laura ts eet hts > Service tax at 6%SA Raa re hl > GST at 6% ‘Charge : RM2®,580 (RM30,000 ~ RMAz20} 6% GST: RIM,LCS IME AUN iahsccelhs hoa dea belbestacahsccadses coh fees oa > Product : biscuit Sastate% WHAT IS GST? What is GST?WHAT IS GST? Basic principles of GST + Aconsumption tax in the form of value added tax ¥- each stage of business transaction up to the retail stage of distribution * Also known as Value Added Tax (VAT) + GST incurred on inputs is allowed as a credit to the registrant “offset against output tax services ete. GST on inputs = Input tax WHAT IS GST? * To replace current tax system Goods and Services Tax (GST) “Rate = 6 % Threshold = RM500,000 + GST is charged on goods and services that are ¥ supplied in Malaysia ¥ importsPROPOSED GSTMODEL PROPOSED GST MODEL aie) LCE e yea e 4/, PROPOSED GST MODEL . HOW GST WORKS? - STANDARD RATED GST AT 6% Si, PROPOSED GST MODEL HOW GST WORKS? - STANDARD RATED Delivery / supply chain Purchase cost : R100 GST": RM6 Purchase price : RM106 Note: claim input tax Selling price : RM125 GST: RW7.50 ‘Total selling price :RM132.50 ‘Added Value : RM25 (Add GST ; RM1.50)IGST GST Mechanism (standard rate) + Tax computation on STANDARD RATED SUPPLY Taxon | Taxon | Net Tax Business | Sales Output | input | Paid Ene PRM) | a (RM) | (RM) Corin ey Cl) GsT rate at 6% Final consumer pays RM106.00PROPOSED GST MODEL HOW GST WORKS? - ZERO RATED GST AT 0% ‘PROPOSED GST MODEL HOW GST WORKS? - ZERO RATED Delivery / supply chain Purchase cost : RM100 GST: RMO Purchase price : RM100 ‘Selling price : RM125 GST: RMO ‘Added Value spas TO!! Selling price RM125.00 “Note lai inputd GST model - Zero rated sup PROPOSED GST MODEL HOW GST WORKS? - EXEMPT GST AT 6 % | GST any Private hospital Private era Col Deke ae en Cr on the supply Peery rr rete utPROPOSED GST MODEL HOW GST WORKS? - EXEMPT Delivery / supply chain Purchase cost : RM100 GST*: RMS Purchase price : RM106 “Note cannot claim input tax Selling price : R131 GST: RMO ‘Added Value : Rm25 Tt! selling price Individual, corporation, Federal Government, State Government, statutory body, local authority, society, trade union, co-operative society, trust, partnership and any other body, organisation, association or group of Persons, whether corporate or unincorporated Scope > Includes natural and juridical persons: > Individual, sole proprietor and partnership company, club, association, society, co-operative, trade union, non profit body and unincorporated bodies > trust, trustee, executor, administrator and joint venture > Federal Government, State Government, statutory body and local authority Meaning of a taxable person a person who is or is required to be registered under GSTcst Supply GST Bill > defines a supply as “all forms of supply” > includes imported services > done for ‘consideration’ > anything which is not supply of goods is supply of services & does not include money est Supply Supplies not subject to GST > cash donation or grants where a person does not get benefit > compensation or liquidated damages > disbursements, dividends, loan repayments or capital injection » transfer of business as a going concern > contribution to pension, provident or social security fundPlace of supply to determine whether a supply is made in Malaysia or not > different rules for supply of goods and supply of services Rules for supply of goods Goods treated as supplied in Malaysia » Sec.12(2) - removal from a place in Malaysia to another place in ‘Malaysia (local supply) > Sec.12(3) - removal from a place in Malaysia to a place outside ‘Malaysia (export) Goods treated as supplied outside Malaysia > Sec.12(2) - removal from a place outside Malaysia to another place outside Malaysia (out of scope) > Soc.12(3) - removal from a place outside Malaysia to a place inside Malaysia (import)a GST Place of supply of services Sec.12(4) - Rules for supply of services * Services treated as supplied in Malaysia if v the supplier belongs in Malaysia * Services treated as supplied outside Malaysia if v the supplier belongs in a country other than Malaysia Place of supply of services Sec.14(1) - Supplier treated as belonging in Malaysia if : MALAYSIA | OTHER ‘COUNTRY Business /Fixed | YES NO | Supplier belongs in eae Supniier belone Usual place of YES” NO belongs in residence Business/Fixed | YES YES | Supplier belongs in Establishment Malaysia if the supply of the business is most directly concerned with MalaysiaBASIC ELEMENTS OF GST Business establishment > head office or principal place of business Fixed establishment > a branch or agency through which business is carried out Usual place of residence > for body corporate, the place of incorporation or legally constituted (registered office) > for unincorporated body, the place where centre of administration is located > for individual, where he sets up home with family and is in full time employment BASIC ELEMENTS OF GST Time of supply = Basic Tax Point ‘basic tax point for supply of goods (a) at the time the goods are removed; (b) at the time when the goods are made available (c) at the time when the supply becomes certain or twelve months after the removal, whichever is the earlier. = basic tax point for supply of services at the time when the services are performed.BASIC ELEMENTS OF GST Time of supply = 21 days rule if tax invoice is issued within 21 days after the basic tax point, then time of supply is the time of the tax invoice Tax invoice issued wihin 21 doys Ph ctacns at A duly | 42a 2thaty 1Aug Goods Taximvoice removed or sued ‘Actual time of supply = 28 ly BASIC ELEMENTS OF GST Time of supply = Events before basic tax point Time of Supply > when the payment is received or tax invoice is issued to the extent covered by the invoice or payment, whichever is the earlier, + 14nine _-2htene tas 01d =Value of supply (consideration in money) Value of supply shall be taken to be an amount, with the addition of GST chargeable, equal to the consideration Value = consideration (money) - GST portion Tax Fraction = Rate / (100+ rate) = 6/ 108 E.g.A sells printer to B and receives RM260 Value of supply = consideration ~ GST = RM260 - (6/106 x RM 260) = RM260 — RM14.72 = RM245.28 4GST = RM14.72 “¢VALUE OF THE PRINTER = RM 245.28 BASIC ELEMENTS OF GST Value of supply * Value of supply (consideration not in money) Value = open market value * Value of imported goods Value = value for customs duty + any customs duty paid + any excise duty paid * Value of imported services r Value = payment paid + Value of supply is not for consideration Value = OMV of supplyest] REGISTRATION FOR GST Registration GST Registration www.gst.customs.gov.mycst Registration ON IEEI REAP Sooos « sences raccoon TE a 7? REGISTRATION FOR GST _ The determination of threshold Taxable Turnover: includes Excludes ¥ Standard Rated ¥ Exempt Supplies supplies ¥ Sale of Capital v Zero Rated Assets Supplies ¥ Imported Services ¥ Deemed Supplies such as private use, etc. Y Designated areas Y Out of scopeicst__ Registration Liability to Register * Any person who makes taxable supply of goods and services in Malaysia Registration is mandatory for businesses with turnover that has exceeded the prescribed threshold Calculation of turnover for registration is based on the total value of the taxable supplies for a 12 month period * Proposed turnover RMS00,000.00 iGst_ Registration + Liability to register is determined by v historical turnover (based on turnover of the current month and the ‘Preceding 11 months) or v future turnover (based on turnover of the current month and the next 11 months) + To apply for registration within 28 days from the end of the relevant month + Effective date of registration will be on the 15 day of the following month 23IGst_ Registration The determination of threshold Historical Method illustration (applicable after appointed date’ First of 12 o Liable to aus Appointed months ee Date sre aiane =i As 1/9As b t ae i exceed ; } threshold i i i liners 5 + + notify and epply for registration — 11 Months + Current month, preceding Gst_Registration The determination of threshold Future Method illustration (applicable after appointed date’ Fest day montis able to registration “ip [- igs ~ Tees — thy a7 15 2 re 31/7/16 4 Last wots notify : and apply for 3 stration. ¥ Current month +11 Months suc 24Voluntary Registration * Businesses below threshold may apply for voluntary registration ° Once registered — must remain in the system for at least 2 years Gst__ Registration Gst__ Registration |As a registered person, what are my responsibilities? Must comply with the requirements under the GST legislation as follows: i. account for GST on taxable supplies made and received ii, submit GST return (GST-03) and pay tax not later than the last day of the following month after the taxable period; iii. issue tax invoiceiGst__ Registration = iv. inform Customs of the cessation of business within thirty days from the date of business cessation; v. inform Customs on any changes of address, taxable activity, accounting basis and taxable period; and vi. keep adequate records of business transactions relating to GST in the National or English language for seven years. Gst__ Registration Other types of registration ¥ Branches or divisional registration ¥ Group registration - group of companies ¥ Registration for non resident — _ appointment of agent ¥ Joint venture registration — petroleum exploration activityae Accounting For Tax~_} =a CB ae CO ae ee | GST Briefing Agenda . Charging Output Tax . Entitlement of Input Tax . Apportionment Rules . GST Adjustments . Taxable period . Submission of GST Return = Oonr wWhd Charging Output TaxGST Input tax and Output tax fair ouTPUT Goods (raw materials, hiine instr goods) Ry SF fetus (rental ° coeens == Business suua wen gt a ws j “> services ( eg. loan of tier mould GST on inputs ean sip ta = Output tax IGSf Output Tax “Scope and charge * GST is charged on >» the taxable supply of goods and services > made by a taxable person > in the course or furtherance of business > in Malaysia . + GST is charged on imported goodsGST Output Tax GST charged on > taxable supplies (sales of goods or sanieant > deemed supplies = disposal of business assets = private use of business asset = imported services . gbods sold in satisfaction of a = gifts costing more than RM 500 ,, GST Output Tax Supplies which may not be subject to GST > > ¥ vv cash donation or grants where a person does not get benefits compensation or liquidated damages disbursements, dividends, loan repayments or capital injection transfer of going concern contribution to pension, provident or social security fund ‘supplies by any society or similar organization ‘supplies excluded from input tax credit (exempt supply) 30GST Issuance of Tax invoice Types of tax invoice when making taxable supplies > full tax invoice > simplified tax invoice32A) (89181 Z—SalddNs 31aVXVL) 6 SOIOANI XVL GalsIId WIS Entitlement of Input TaxGST Allowable Input Tax ‘Supplies > taxable supplies = standard rated or zero rated supplies = disregarded supplies (supplies within group, supplies made in warehouse, supplies between venture operator and venturers and supplies between toll manufacturer and overseas principal) > supplies made outside Malaysia which would be taxable supplies if made in Malaysia > any other prescribed supply (Fixed Input Tax Recovery) | 34GST Fixed Input Tax Recovery Commercial Bank (non business) Incidental exempt financial supplies: > deposit of money > exchange of currency > holding of bonds or other debt securities - > transfer of ownership of securities provision of loans, advance or credit to employees or connected persons . , assignment of provision of trade receivables holding or transfer of trust unit hedging of interest, commodity, utility or freight risk vv v 3GST Incidental Exempt Financia! Supplies Special tax treatment does not apply t >» banks » development financial institutions or money lenders v insurance company stock or futures brokers pawn broker or hire purchase companies debt factor or credit or debit card companies investment or unit trust or venture capital company vvv Vv > * v v GST Input Tax Credit Input Tax Mechanism Tax paid on inputs to be offset against the output tax in the relevant taxable period Subject to a time limit of 6 years from the date of supply or importation Apportionment rule to apply for a mixed supply Refund to be offset against other unpaid GST, customs and excise duties Net tax to be refunded within ¥ 14 working days for on-line submission ¥_ 28 working days for manual submissionConditions: > Claimant must be a taxable person > Must have a valid tax invoice + fulltax invoice ‘simplified tax invoice «claim the input tax up to a limit of RMBO.00 if name and address of recipient isnot stated in invoice (GST at 6%) Invoice issued by approved person under Flat Rate Scheme Customs No 1!Customs 8 (imported goods) ‘= document to show claimant pays imported services Invoice issued under the name of the claimant Goods and services acquired are not subject to any input tax restriction e.g., motorcars Good and services are acquired for the purpose of making taxable supply v v v GST Non Allowable Input Tax Blocked input tax > passenger motor cars including hiring of car 7eke. et eZ eS OTS] GST Blocked Input Tax , Family benefits > any benefits (including hospitality of any kind) provided by the taxable person for the benefit of any person who is the wife, husband, child or relative of any person employed by the taxable person for the purposes of any business carried on or to be carried on by the taxable person _ Club subscription fee > any joining 9 subscription Peas fee, membership fee, transfer Li fee or other consideration jammNPeryee ti Ad charged by any club, (UAW aah association, society or organization established principally for recreational or sporting purposes or by the transferor of the membership or such club, association, society or organizationGST Blocked Input Tax medical and personal accident insurance HongLeong %, : Personal Accident Plan Getting Protection from Life's Unpredictabilitys ro Medical expenses > any medical expenses in connection with the provision of medical treatment to any person employed by a taxable personGST Blocked Input Tax Entertainment Spouse or family members. Potential clients cst Apportionment - RulesGST Apportionment Rules = No apportionment if can attribute wholly >full input tax if wholly attributable to taxable supplies >no input tax if wholly attributable to exempt supplies = Apportionment rules > applicable when goods and services are used for both taxable and non-taxable supplies GST Apportionment Rules ites ern otto Cree oy aGST Apportionment Rules Mechanism for input tax apportionment > Turnover-based method as a_ standard method for apportioning any residual input > Value of taxable Taxable portion = ——sIppies — > round up or down to YAW ROL AUEHRS WEtimal places Input tax claimable = Taxable portion X Residual input tax GST Apportionment Rules RESIDUAL INPUT TAX > input tax that is attributable to making both taxable and exempt supplies Eg. A train company that supplies both taxable supply ie. freight services and exempt supply ie. passenger transportation. INPUT TAX ATTRIBUTED TO | TYPES OF INPUTS Taxable Supply — Weight services Ropar seve tothe regi coach or ‘Exempt supply — passenger Train Seals, television, curtains, bunks, transportation tc, ‘Both supplies (taxable and Electricity, water, maintenance exempt) ‘services, telecornmunication services 42GST Apportionment Rules Example: Taxable supplies = RM300,000 Exempt supplies = RM250,000 Residual input tax= RM8,000 Taxable portion pa RM300,000 + RM250,000 = 54,5454% = 54,55% (2 decimal places) Input tax claimable = 54.55% X RM8,000 = RM4,364 SE pe GST Apportionment Rules Standard method > must reflect correct proportion to which the inputs are put to use > if does not reflect correct proportion, use alternative methods = floor space method = transaction based method = input base method a = cost centre accounting method = employee time method > use of alternative methods requires prior approval 43GST Apportionment Rules Example: A finance company Arus Sdn Bhd, deals in taxable leasing and exempt personal loans services. The value and number of transaction of taxable and exempt ‘supplies are as follows: Lol ere Wy % Value(RM) % Be ie Leasing agreements ange ne 5 60 | 750,000 | 42.9 Personal loans entered into 50 40 | 1,000,000 | 57.1 TOTAL 125 100 | 1,750,000 | 100 SS GST Apportionment Rules De Minimis Limit Exempt input tax can be recovered in full if the total value of exempt supply is less than a prescribed amount > Prescribed amount = total value of the exempt supplies does not exceed ¥ an average of RMS,000 per month and ¥ not exceeding 5% of the total value of total supplies (all taxable and exempt supplies) made in that period Example: Factory provides transport (workers bus) to his workers for a chargeGST De Minimis Limit Example 1: A manufacturing company provides bus transportation to its workers and charges them. Activity | Taxable | Exempt Value (RM)| 150,000 | 4,000 2.6 Full recovery of input tax allowed GST De Minimis Limit Example 2 : A manufacturing company provides bus transportation to its workers and charges thy Taxable | Exempt 500,000 10,000 2.0 Value (RI Full recovery of input tax are not allowed, have to apply apportionment rule on ITC Residual | Taxable | Exempted mic | Total input ‘input Tex_| Supplies | Supplies | Claimable Te TRN500 | RMSO0000 | RM0,000 | 98% | _RM490.00Gst GST Adjustments GST Adjustments Adjustments to input tax and output tax >» when the taxable person receives debit notes or issues credit notes payment not received after 6 months (bad debts) debtor has become insolvent before expiry of 6 months payment not made for supply after six months change of use of assets (from exempt to taxable) change of accounting basis (e.g., payment basis to invoice basis) annual adjustment for mixed supplier Capital Goods Adjustment for mixed supplier (change in the proportion of use) 2 vv vVvvV vv 46GST Adjustments — Credit note Adjustments due to credit note issued > credit note is issued when the amount previously invoiced is reduced or a transaction is cancelled > supplier, already accounted for output tax, jluces output tax in the return for the taxable period in which the credit note was issued > buyer, already claimed input tax, reduces input tax in the return for the taxable period in which he received the credit note GST Adjustments — Credit note ple: gods sold on 20.16 by company A to company B, amount RM, 000 ST 6%. Goods returned on 12.216 to company A, amount 1210] inclusive GST). Credit note issued on 26,2.2016 by company A fssuaing company isin monty taxable period) ompany A (seller) utput tax: RM1000 x 6% = RM6O (Feb 2016 return) i H 10x 6/108 = RMI1.89 tual GST paid fo Customs is RMA8.11 . Company B (buyer) fassuming company is in month taxable period) i Input tax: RM1000 x 6% = RM60 (Feb 2016 return) Adjustment to reduce input tax (Mac 2016 return) RM210x 6/106 = RM11.89 Actual input tax claimed by Co. B is RM48.11 a7|GST Adjustments — Debit note Adjustments due to debit note issued > debit note is issued when the amount previously invoiced is increased > supplier has to increase output tax in the return for the taxable period in which the debit note was issued > buyer has to increase input tax in the return for the taxable period in which he received the debit note ae oF a ee a Goods sold on 201.46 by company A to company 8 amount RMY,000 excluding GST 6%, Debit note issued on 26.2.2016 by company A for iemeporatcn charges for delivery of the goods, amount RM105 (inclusive {assuming company is in monthify taxable period) GST Adjustments — Debit note ple ‘Company A (seller) ‘Output tax: RM1000 x 6% = RMGO (Feb 2016 return) | Adjustment to increase output tax: RMIO5 x 6/106 = RMS.94 Actual GST paid {output tax} to Customs is RM5.94 . Company aya mig compe iy Input tax: RM1000 x 6% = RM6O (Feb 2016 return) Adjustment to increase input tax (Mac 2016 return) M105 x 6/106 = RM5.94 \______m____Actuwal input tax claimed by Co. B is RM65.94 _*| 48GST Adjustments — Bad Debts Adjustments due to bad debts > supplier is entitled to bad debts relief > supplier claims as input tax in the return for the taxable period in which the bad debts are given relief > output tax amount to claim Al inputtax — xC B where ~ ‘1 is the payment not received in respect of the taxable supply Bis the consideration for the taxable supply Cis the tax due and payable on the taxable supply > customer account as output tax in the return for the taxable period in which the bad debts are given relief " GST Adjustments — Bad Debts Payment not received ARUS Sdn Bhd made a supply and issued a tax invoice on 5.2.16 to RBS Sdn.Bhd for RM21,200 inclusive GST 6% (RM20,000+RM1,200 GST). Tax has been accounted by ARUS in Bhd for the month of Feb. Part payment of RM12,000 os, of GST RM679.25) for the supply was received on 12.5.16. Balance cee was not received after six months from the date of tax invoice issued. ARUS can claim bad debt relief by accounting as input tax in his August return. The claimable bad debt relief is as follows:- x RM1,200 = RM 520.75 RM21,200 oe 49GST Adjustments —Bad Debts Speners due to payment received in respect of bad fel > supplier has made the claim for bad debt relief > subsequently customer paid the debt > supplier accounts as output tax in the return for the taxable period in which the payment is made > output tax amount to account — xc where outta B ‘A2 is the payment received in respect of the taxable supply Bis the consideration for the taxable supply Cis the tax due and payable on the taxable supply > customer claim as input tax in the return for the taxable {____period in which the pavment is made __»| GST Adjustments - Bad Debts Payment received after six months Please refer to the same example of ARUS Sdn Bhd. Assuming the customer pays the balance of RM 9,200 foals ‘tax of RM520.75) on 511.2016 (after the expiry of months from the date of supply). ARUS must account for output tax calculated as follows:- - > RM 9,200 x RM 1,200 = RM 520.75 RM21,200Taxable period GST Taxable period egular interval period where a taxable person accounts and pays GST to the government * The taxable period will be determined at the time when the GST registration is approved —-quarterly basis ‘for businesses with annual tumover not exceeding M5 million —-monthly basis “for businesses with annual turnover exceeding RM5 million * Ataxable person may apply to be placed in any other category other than his pre-determined taxable period gz 5Record Keeping RECORD KEEPING > Sec. 36 - requires every taxable or registered person to keep full and true records of all transactions which affect or may affect his liability to tax. > These records should be kept in Malaysia except as otherwise approved by the Director General and shall be in the national or Englishlanquage, and - > Should be preserved for a period of seven years from the latest date” to which the records relate, 52RECORD KEEPING © What are Records? Records are documents which include all books of account or relevant computer print-outs if a computer is used, as well as supporting documents. If the record is in an electronically readable form, a manual to the software must be available. Records may include: a) all records of goods or services supplied by or to that taxable person including tax invoices, invoices, receipts, credit note, debit note and import-export declaration forms; b) all records of importations of goods; c) physical books of account, financial statement and documents including computer printouts of business and accounting records: d) electronic records; and e) all details of the accounting system, including charts, codes of accounts, instruction manuals, system and program documentation and specification, etc. RECORD KEEPING Record Keeping — WHO and WHY? > alll taxable persons should keep all accounting documents and records of all business supplies and acquisitions. > person other than a taxable person e.g., recipient of imported services, auctioneer, deregistered person claiming bad debt relief ‘and local recipient under ATMS > to enable GST auditors to establish the nature, time and value of all taxable supplies and importation of goods and services, _ > to reconcile accounting records with the GST returns submitted. > details of any exempt supplies and any method of apportionment used should also be available. 53RECORD KEEPING ‘Category of preserving records > Physical records — hard copy > Electronic records ~ soft copy ‘Types of Records > Records relating to registration + SSM records ~ FormA, B, C, 8,9 and etc. » Records relating to business activities * tax invoices, invoices, receipts, + debit note, credit note + delivery order, purchase order + Bank slip, bank statement, voucher and etc + Contract, agreement > Records relating to accounting (hard copy) + Financial statement — Profit & Loss, Balance Sheet, Trial Balance + Account payable, account receivable, General ledger, Sales, Purchase , stock, cash and etc. ws RECORD KEEPING Types of Records (cont..) > Records relating to taxation Customs forms — K1, K2, K9 and etc GST —GST retums, registration and etc GST adjustment sheet Income tax declaration » Records relating to electronic form Accounting software manual Accounts chart, access code, ene on. tenth Audit trail ° Purchase, Sales, GL Listing (el ae ay ‘out of scope, deemed supply etc) GAF File (GST Accounting Software) + Management Information Report (MIS) report * Other data / records kept in accounting / business software77 RECORD KEEPING ‘Example of GAF File Caprese CereorftmetCaroanuenesTPeicdSanFerod nai creterOuaPratiienerlAt Wen SizGplomtas inspectorate oavootoet oem sen Mt wescr aS OO, ferent ecm ateroastbeurganPrantnsoDOST CyomprsaarcnsTron ‘Reco co Sons ‘Seauaorooraame oom 04 ‘Se cntero os aoa se ‘Re snastot 24 orton az ahr 0 ‘Sopeto-y aan co on ‘8oner1901)v Csaba SRD 0.2 RECORD KEEPING > Other Records 8) Business goods which were put to non-business use; b) Disposal of business goods, whether or not for a consideration; ©) Gifts to customers in the course or furtherance of business; d)Samples given to potential customers in the course or furtherance of business; . + c) Fringe benefits given to employees; and, ‘4) Movement of imported goods to / from Licensed Warehouse .Records on GST Summary Sheet > GST summary sheet is a summary of the value of acquisition’ supply and input/output tax for each taxable period > Facilitate taxable persons to submit correct and accurate GST returns > Assist any audit process > All the records must be kept up-to-date and must be in sufficient detail to ensure the correct calculation of the amount of GST that you have to pay to, or to claim, > Prepare summary sheet with separate headings as follows: ¥ Total aequisition and input tax ¥ Total supply and output tax ¥ Additional information [Sanaa a "RECORD KEEPING | Records on GST Summary Sheet ‘Summary Shoot —Total Acquisition and Input Tax for Taxable Period 1 Jan-31 Mac 2014 Standart Rate Pushasas alu (nat Tet) 1 Purchases fo make ‘Standard raed poy “sree sely 2 Purchase of capa goods “sland ried su exempt sey 3. imponed services 4) GST on imports ‘Swot . ‘ata, 1 Cre oleate 2. Cantal geods ausiment 5 Annual aguement Sima! To isyey - , 9 - RECORDKEEPING = "Records onGST SummarySheet = = = ~~ ‘Summary Sheet ~ Total Supply and Output Tax for Taxable Period 1 Jan-31 Mac 2014 ‘Sanaa Rate Suping ae can ‘Quo Ta 68) 1 Nota supp 2. Dispos of business assets 3. Deemed supp. ‘Gite, buemess asset ute privat te 4. Impones sorvices ‘Sibi ‘uatmenta: 1 Boa debt cover 2 Credit rool rte 3. Gapial goods eohtment Sebo Taal Nett payabll(taimable) (Output ax — Input tx) as RECORD KEEPING Records on GST Summary Sheet ‘Summary Sheet ~ Additional information for Taxable Period 1 Jan-31 Mac 2014 ‘Dee ot Suooty ate ssn 1) Toa Value zo tad ~ ca suepies 2 Total Valuo of eon supptes |. Total Vive of exempt supoes 4. Total Value of Supplies with GST at 5. Jota tnd nota > ‘Secalacons on OY spots 8. Tota Vale of ropa euores ‘Total 7- RECORDKEEPING Records to be Kept Regarding Bad Debt Relief Ciaim > Taxable persons are required to maintain and preserve all records and documents in respect of bad debts. > Additional records that are required to be kept to support bad debt relief claims include: {a) tax invoice or other documentary evidence showing the time, nature, purchaser and the consideration of the supply; (b) records or any other documents showing that you have ‘accounted for and paid the tax; (6) records or any other documents (e.g. debtor's aging list) showing that the consideration has not been received after 6 months from the date of supply and accounted as bad debt in the taxable person's account ; RECORD KEEPING Records to be Kept Regarding Bad Debt Relief Claim (con (@) records or any other documents showing that all reasonable efforts have been taken by the taxable person to recover the debt e.g, letter of demand from company / company's solicitor or legal action taken against the debtor; {e) insolvency records e.g. letter from Department of Insolvency, court order for winding up, letter of appointment of receiver; and (f) maintain a single account .known as “refund for bad debts account”Record for GST Bad Debt Relief Claim Taxable persons should also maintain a record showing details of supply in respect of each claim made : (2) deta of supp for hat lai: > debior’s name and addres; > the amount of GST chargesbie > tha taxable period In which the GST chargeable was accounted for and pido the Director General > the date and serial aumber ofthe invoice tse and > any payment received () the outstanding GST amount io which the claim relates (6) the ota! amount of GST eam; and () the taxable period in which the ciaim was made. All such records have to be Kept fora period of seven years from the date of making the ‘claim and shall be produced to the Director General for Inspection, Submission of GST Returns 59GST Submission of GST Returns Filing of Returns > GST returns and payments must be submitted not later) than the last day of the month following the end of the taxable period > Electronic filing is encouraged ° ‘ " GST Submission of GST ReturnsGST Submission of GST Returns When to submit GST Return oer ST > quarterly taxable Last Date of submission Soka Output taxable supplies Tax CoS Ce) Input Tax business purchases OTT taxable person Pay GST to et 61GST Submission of GST Returns Sample of GST Return = Calculation of output tax + Value of taxable supplies made —_[ rawt,000000 + Output tax ‘Rw40,000_| 2 * Calculation of input tax + Value of taxable supplies received { RM 600,000 + Input tax “RM 24000 | 4 = Net tax payable/refundable + GST payable (2-4) RM 16,000 | 5 + GST refundable (4-2) ee en ee a ees ae | GST Submission of GST Returns Sample of GST Return * Calculation of output tax + Value of taxable supplies made * Output tax = Calculation of input tax + Value of taxable supplies received [ Rut, 600,000) » * Inputtax — ~ [Rw 64,000] + = Nettax payable/refundable + GST payable (2-4) Cs 62est Transitional Issues & GST Readiness SS OS SF] GST Agenda [BD Acts Repealed [E> Supply Spanning GST [BD Non Reviewable Contract BD Special Rules [BD GST ReadinessActs Repealed (f (ip + From the appointed date (AD - implementation of GST) > Still enforced on matters where tax is due and payable and liability (offences) incurred: Cory eee Drawback [J PenaltyRepeal of Sales Tax and Service Tax Gs Final return for sales tax + Final return must be submitted not later than 28 days from the date the GST Act comes into force (GST implementation date) + Alltax liabllties must be accounted in the final return Final return for services tax + Return can be submitted in accordance with the Service Tax Act(payment basis). The licensee may have to submit two retums: ¥ GST return Special form for service tax until the expiry of 12 months from the GST implementation date es ‘When to submit final or last return under Sales Tax | Services Tax? > Taxable Poriod : Feb / Mac (Wee ) Last date of submission: EE > Taxable Period : Mac April Last date of submission: EEEGst Supply Spanning GST GST Transitional Period Prepaid Card exo st *Prepaid card sold ° 299 (Inclusive of Service Tax) & A | Mer ost , | a Prepaid card for the telecommunication al mage | service is subject to GST upon usage. sta to ai Kopada S81 6The services rendered IGSf Supplies Spanning GST ‘What is supply spanning GST? > Payment or invoice before appointed date and supply takes place on and after appointed date or vice versa e.g. sales of goods, airline tickets and cinema General Rule > Any supply before appointed date is not subject to GST > Any supply on or after appointed date is subject toGST Exception to general rule . 2 > Supply of warranty > Provision of goods where sales tax has been charged > Provision of services where service tax has been charged > _Non reviewable contracts 67IGST Supplies Spanning GST BeforeGST | OnorAfter GST Implicationon GST |_Beforeost_| OnorAterGSt_| __Implicationon GST ___| Prescribed r Payment Not subject to GST moe received | sunjectto service tax Payment ; it Not subject to GST received / Prescribed servicetax _| Services supplied | SUblect to service tax charged or paid Payment Value of supply deemed recanga Non prescribed [inclusive of GST and account in services ‘the 1* taxable period after the ce appointed date GSt Supplies Spanning GST If the invoice for renting a hall is issued before GST implementation date, prior to an event which would only take place after AD: The service is not subject to GST but subject to service tax. 68GST Supplies Spanning GST Tickets sold before GST implementation but services perform after AD eg. admission tickets to theme park * Subject to GST; Amount to be paid GST inclusive eg: Ticket price at RM100. Account for GST = RM100 * 6/106 Non Reviewable 5 ContractGST Non Reviewable Contract Non reviewable contract > Written contract with no provision to review consideration for the supply until a review opportunity arises AND > 24 months before the date of GST implementation (AD) GST Non Reviewable Contract > Zero rate supply for 5 years after appointed date or when a review opportunity arises whichever is the earlier if = Both supplier and recipient are registered persons; = Supply is a taxable supply; and = The recipient of the supply is entitled to claim mee tax on that supply ¥ > After 5 years period, revert to either standard rate or zero rate 70Gst a Special Rules IGST Special Rules Treatment of Supplies Spanning GST > GST to be imposed at the time when goods are removed or when services are performed > Special transitional rules to cater for certain transactions eg. rights granted for life such as club membership, retention payment etc teBusiness Preparation pz | 5s lect a, a ae Sell GST GST Implementation Approach ent ‘compliant 5} ee ‘1 phase 2% phase 3 phase Coccm | Develop Lum | implementation fice Key areas requiring attentionGST Business’ Role - Getting the tax right > Engagement with government > Understanding the principles, application and impact on your business accounting, invoicing pricing and contracts > Assist in developing a practical solution > Conduct executive awareness sessions to begin preparation for GST > Perform transaction mapping to identify required changes GST Businesses’ Preparation GST Implication on Prices » Identify existing suppliers = Talk to small suppliers to get them registered = Review procurement policy to avoid tax cascading = Negotiate prices with suppliers to pass on saving > Review sales price . : = Passon saving r * Absorption of GST * Price Control and Anti Profiteering Act 2011 73lest Businesses’ Preparation GST Implication on Cash Flow > Need to analyze cash flow impact * Cash recover from customer before GST is due = Assess the need to provide for one time fund to cater for GST payment upfront » Review credit terms to customers > Review requirement to apply for special schemes a GST Businesses’ Preparation GST Implication on Bad Debts > Ensure a proper matching of GST payment to government and payment received from customers > Monitor payment from customers. » Understand evidence of ‘reasonable efforts’ 74GST Businesses’ Preparation GST Implication on Invoicing > Identify whether standard rate, exempt, zero rate or out of scope supply » Issuance of full and simplified tax invoice > Requirement not issue tax invoice for imported services and second hand goods under margin scheme > 21 days rule » Self billed invoice GST Businesses’ Preparation GST Implication on Output Tax > Gifts > RM500 subject to GST > Discounts > Commercial samples in a form not ordinarily available for sale to the public not subject to GST > Deemed supply e.g., private use and disposal of — » business assets subjecttoGST - > Supplies to connected persons 75GST Businesses? Preparation - GST Implication on Input Tax > Input tax credit = apportionment of input tax = annual adjustment (partial exemption) + Capital Goods Adjustment Blocked inputs not claimable > Incidental financial supplies Claim of input tax > RM30 to be supported by full tax invoice or simplified tax invoice where name and address are indicated on the invoice De Minimis Limit Vv v v GST Businesses’ Preparation GST Implication on Contracts > Avoid long term contract without legal review > Absorption of GST > Pricing strategy to pass on saving GST Implication on Human Resource > Upgrade staff understanding of GST > Avoid unnecessary mistakes » > False information may open to audit case > Review policy on fringe benefits 76GST Implication on System > Review system and processes > Perform complete mapping of transactions to identify required changes > GST liability on every transaction > Use of online submissions to tax agency > Computerized system Ready made software * Upgrading present system End of Presentation Royal Malaysian Customs —Pusat Pontadbiran Kerajean Persekutuan Malaysia, 62596 PUTRAJAYA, Tel :03-98823000 1) GST PORTAL —httpilwew.gst.customs.gov.my Ai Customs Call Centre (CCC) Tok: 03-78067200 Fax: 09-78067585, mal cec@ustoms.gor.my 'w_ Annie Thomas annie shomas@customs.gov.my Tol : 03 ~ 83237424 ax - 03-8882 2432 78