Malaysia GST Overview and Implementation

The slideshow provides an overview on Malaysia GST implementation and how it affects Malaysia businesses.

The content have been developed as a quick getting-started guide on a general understanding basis and are not intended to suit any particular organisation without further consulted professional advice.

Transcript

1. © 2014 FCA Business & Tax advisory GST OVERVIEW & IMPLEMENTATION BY FCA BUSINESS & TAX ADVISORY The contents of this seminar have been developed on a general understanding basis and are not intended to suit any particular organisation without further consulted professional advice. FCA Business & Tax Advisory Sdn Bhd (FCA), including its directors, employees, agents and entity controlled by or owned by or associated with FCA, accepts no liability or responsibility on whatsoever loss, damage, expense or cost to any party resulting directly and/or indirectly from the use, application and /or referral of this seminar materials and /or contents and/or the reliance by any party, either in part or in whole.
2. © 2014 FCA Business & Tax advisory Your Company GST GENERAL IMPLICATION Sale of goods to local customer – Standard Rated Input Output Commercial Rental – Standard Rated Advertising expenses – Standard Rated Import / local purchase of goods – Standard Rated Medical and personal accident insurance – Blocked Input Tax Entertainment – Standard Rated / Blocked Input Tax Interest expenses (e.g. borrowings) – Exempt Sale of fixed asset (except on blocked item) – Standard Rated Service fee – Standard rated Rental expenses – Standard Rated / Exempt Free gift (>RM500) - Standard rated (deemed supply) Exportation – Zero Rated Types of Supply Place of Supply Time of Supply Value of Supply  By Fca business & Tax Advisory
3. © 2014 FCA Business & Tax advisory Zero-rated Supplies • Includes: • Exports - goods and services, i.e. including international services • Agriculture products - rice and fresh vegetables • Foodstuff - rice, sugar, table salt, plain flour, cooking oil • Livestock supplies - live animals, meat of cattle, buffaloes, goat, sheep and swine (fresh or frozen) • Poultry - live and unprocessed meat of chicken and duck • Egg (fresh and salted) and fish • Supply of the first 300 units of electricity to domestic users • Supply of treated water to domestic users Exempt Supplies • Includes: • Sale and lease of residential property • Financial services (including life insurance and family takaful) • Toll highway • Private health and education • Domestic transportation of passengers for mass public transport by rail (KTM, LRT, ERL, Monorail, ships, boats, ferries, express bus, state bus, worker bus, school bus, feeder bus and taxi) • Land for agricultural purposes and land for general use (Government building and burial ground) Out-of-Scope Supplies • Includes: • Supplies: • Not made in Malaysia • Not made in the course or furtherance of a business • Made by a person who is not registered • Transfer of business as a going concern • Sales of imported goods within bonded warehouses (except last sale) • Supplies and services by Government, Statutory Bodies and Local Authorities (except certain prescribed services) TYPE OF SUPPLIES  By Fca business & Tax Advisory
4. © 2014 FCA Business & Tax advisory TYPE OF SUPPLIES Supplier 1 Price: RM 10 GST: RM 0.60 Tax remitted to Customs Output tax = RM 0.60 Total amount remitted to Customs = RM 3.60 End Consumer Price: RM 50 GST: RM 3.00 Price: RM 60 GST: RM 3.60 Output tax = RM 3.00 Input tax Claim= RM 0.60 RM 2.40 Output tax = RM 3.60 Input tax Claim= RM 3.00 RM 0.60 GST @ 6% Your Company Supplier 2 (Standard-Rated Supply)  By Fca business & Tax Advisory
5. © 2014 FCA Business & Tax advisory TYPE OF SUPPLIES Taxable Supply Standard Rated 6% Zero Rated 0% Non-Taxable Supply Exempt Supply No GST Out-Of-Scope Not a Supply How do you ensure compliance? • Get a GST Certified Consultant to advise proper tagging of tax code to supply • Using GST Certified Software to tag GST tax code to supply instead of using manual or non-certified software • Mixed Supply business is advisable to go for Grade A GST certified software  By Fca business & Tax Advisory
6. © 2014 FCA Business & Tax advisory PLACE OF SUPPLY - GOODS From Location Final Location Place of Supply Subject to GST ? Malaysia Malaysia Made in Malaysia Local delivery of goods in Malaysia is subject to GST at 6% Malaysia Japan Made in Malaysia Export of goods from Malaysia qualifies for zero-rating Japan Malaysia (your company is the importer in custom document) Made Outside Malaysia (from the perspective of the supplier) Goods imported into Malaysia subject to GST at 6% China Japan Made Outside Malaysia Drop-shipment of goods outside Malaysia is out-of-scope • If the supply is made outside Malaysia, GST will not be charged on the supply • If the supply is into Malaysia, GST is charged at point of importation From and Final Location Movement of the Goods e.g.  By Fca business & Tax Advisory
7. © 2014 FCA Business & Tax advisory PLACE OF SUPPLY - SERVICES • Treated as in the country where the supplier belongs • Supplier belongs in Malaysia, every supply of services provided within the scope of GST Place of Suppliers Belonging SUPPLIER OF SERVICES BELONGS ? MALAYSIA OTHER COUNTRY Business / Fixed Establishment YES NO Supplier belongs in Malaysia Usual place of residence YES NO Supplier belongs in Malaysia Business / Fixed Establishment YES YES Supplier belongs in Malaysia if the supply of the business is most directly concerned with Malaysia  By Fca business & Tax Advisory
8. © 2014 FCA Business & Tax advisory PLACE OF SUPPLY  Many more rules and regulation might be implicating the businesses:  Supplies to/from designated areas (e.g. Langkawi, Labuan and Tioman)  Supplies through e-commerce (e.g. goods, digital products and services)  Place of supply of services  Concept of permanent establishment  Importation of services into Malaysia (Reverse Charge Mechanism)  Supplies covering region basis (inside and outside Malaysia)  and others  By Fca business & Tax Advisory
9. © 2014 FCA Business & Tax advisory PLACE OF SUPPLY How do you ensure compliance? • Get a GST Certified Consultant to advise tax treatment of various sale transactions in different scenario • Using GST Certified Software to tag GST tax code to transactions instead of using manual or non-certified software to minimize human errors • Provide GST training to accounting staffs to equip with GST accounting knowledge and skills  By Fca business & Tax Advisory
10. © 2014 FCA Business & Tax advisory TIME OF SUPPLY • Important to determine when to account for GST • To account and pay GST output even payment not yet received from customers The time when a supply of goods or services is treated being made General Rule In most cases, time of supply shall be the earliest of the following: 1. Basic Tax Point • For Goods – at the time of removal/delivery • For Services – at the time of services performed 2. Tax Invoice is issued 3. Payment is received  By Fca business & Tax Advisory
11. © 2014 FCA Business & Tax advisory TIME OF SUPPLY Goods delivered Tax inv issued Submit GST return & on 20.12.15 19.01.16 pay GST 31.01.16 31. Inv issued > 21 days Pay # later than Time of supply 30.09.15 & Basic Tax Point Actual Tax Point Assumptions : • accounting basis = invoice basis • quarterly submission • the quarter taxable period = Oct 15 – Dec 15 • last day of submission & pyt for the above taxable period = 31.01.16  By Fca business & Tax Advisory
12. © 2014 FCA Business & Tax advisory TIME OF SUPPLY Assumptions : • accounting basis = invoice basis • quarterly submission • the quarter taxable period = Oct 15 – Dec 15 • last day of submission & pyt for the above taxable period = 31.01.16 Goods Delivered Tax inv issued Submit GST return & on 20.12.15 09.01.16 pay GST 30.04.16 31. Inv issued < 21 days Pay # later than Time of supply & 30.09.15 Basic Tax Point Actual Tax Point  By Fca business & Tax Advisory
13. © 2014 FCA Business & Tax advisory TIME OF SUPPLY  Many more rules and regulation might be implicating the businesses:  21 days rule  Continuous supplies spanning over a period  Consignment goods  Coins operated machine  Imported services  Cash flow issues and credit terms  and others  By Fca business & Tax Advisory
14. © 2014 FCA Business & Tax advisory TIME OF SUPPLY How do you ensure compliance? • Get a GST Certified Consultant to advise correct time of supply to account GST and prepare cash flow planning • Using GST Certified Software which helps automate process on time of supply to account GST in right taxable period • Provide GST training to accounting staffs to equip with GST accounting knowledge and skills  By Fca business & Tax Advisory
15. © 2014 FCA Business & Tax advisory VALUE OF SUPPLY • Amount of GST is the value multiplied by the tax rate- 6% Value on which GST is chargeable Consideration “106%” Value of Supply “100%” GST Amount “6%” + =  By Fca business & Tax Advisory
16. © 2014 FCA Business & Tax advisory VALUE OF SUPPLY  Many more rules and regulation might be implicating the businesses:  Consideration wholly in money  Consideration partly in money and in kind  Consideration wholly in kind  Supply with no consideration  Supply to connected persons  Value of imported goods/services  and others  By Fca business & Tax Advisory
17. © 2014 FCA Business & Tax advisory VALUE OF SUPPLY How do you ensure compliance? • Get a GST Certified Consultant to assess impact of GST treatment on various transactions • Using GST Certified Software which helps capture correct amount of GST • Provide GST training to accounting staffs to equip with GST accounting knowledge and skills  By Fca business & Tax Advisory
18. © 2014 FCA Business & Tax advisory GST ADMINISTRATION AND REPORTING Annual Turnover Taxable Period RM 5m and above  Monthly (1 month) Less than RM 5m  Quarterly (3-month) GST payment and GST return forms are to be submitted:  within 1 month after the end of the “Taxable Period”.  By Fca business & Tax Advisory
19. © 2014 FCA Business & Tax advisory GST ADMINISTRATION AND REPORTING GST Audits GST law operates on a “Self-Assessment” System.  The Registered Person is responsible for his / her own GST reporting, and must ensure the correct amount of GST is paid.  Customs officers will conduct GST audits on the Registered Person to verify the accuracy of the GST return form or GST amount paid. GST audits can be conducted within 6 years However, there is NO time limit for cases involving fraud / wilful default.  By Fca business & Tax Advisory
20. © 2014 FCA Business & Tax advisory GST ADMINISTRATION AND REPORTING  Many more rules and regulation might be implicating the businesses:  Bad debt relief/recovered adjustments  Unpaid suppliers invoices adjustments  Blocked input tax  GST Transitional provision  Long term contracts (spanning over 1st April 2015)  Record keeping requirements  and others  By Fca business & Tax Advisory
21. © 2014 FCA Business & Tax advisory GST ADMINISTRATION AND REPORTING How do you ensure compliance? • Get a GST Certified Consultant to get GST the FIRST time • Using GST Certified Software which helps automate process, reduce workload and minimize human errors • Provide GST training to accounting staffs to equip with GST accounting knowledge and skills  By Fca business & Tax Advisory
22. © 2014 FCA Business & Tax advisory GST PENALTIES • A fine not less than RM1,500 and not exceeding RM20,000 Penalty for late registration • A fine not exceeding RM50,000 or imprisonment not exceeding 3 years; or BOTH; and • A penalty equal to the undercharged tax Penalty for incorrect return • 1st offence – a fine of 10-20 times of amount of tax or imprisonment not exceeding 5 years; or BOTH • 2nd offence- a fine of 20-40 times or imprisonment not exceeding 7 years; or BOTH Penalties for evasion of tax  By Fca business & Tax Advisory
23. © 2014 FCA Business & Tax advisory GST IMPACT TO BUSINESS GST Business Efficiency Sales & Marketing Procurement Finance & Accounting Human Resource  By Fca business & Tax Advisory
24. © 2014 FCA Business & Tax advisory GST IMPACT TO BUSINESS Businesses may be impacted by the followings :- a) Business efficiency  less competitive as a result of application of wrong category of supply, ie standard rated supply instead of zero and out of scope supplies.  additional work flow and paper work b) Sales & Marketing and Procurement  equip sale staff with well awareness on the vitality of time of supply / tax point  aware of GST impact on sale transactions/contracts (ie, forward sale)  By Fca business & Tax Advisory
25. © 2014 FCA Business & Tax advisory GST IMPACT TO BUSINESS c) Finance & accounting  establish a friendly and an effective credit control system in order to alleviate cash flow  able to identify Blocked Input Tax, claim the correct input tax  ensure timely accounts processing and closing  By Fca business & Tax Advisory
26. © 2014 FCA Business & Tax advisory GST IMPACT TO BUSINESS d) Human Resources  staff are well trained and prepared  Exercise effective implementation by stages with proper division of responsibility e) Information technology  use of right and suitable accounting software and/or any IT to automate the processing/reduce work load  Use of technology to reduce human errors  By Fca business & Tax Advisory
27. © 2014 FCA Business & Tax advisory THANK YOU Contact : FCA Business & Tax Advisory SB www.egst.com.my enquiry@egst.com.my fam@egst.com.my alan@egst.com.my guomiao.eng@egst.com.my