SEMINAR GST GST Treatment S14(2) Industry Date : 18 June 2014 Venue: Pullman, Putrajaya
Agenda 1 2 Charging Output Tax Tax invoice 3 Entitlement of Input tax 4 GST Treatment 5 Transitional Period 6 7 8 Taxable Period Submission of GST Return Business Preparation 2
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Input tax and Output tax INPUT Goods (raw materials, machines and other goods) Services (rental telephone and insurance) Utilities (electricity and water) GST on inputs = Input tax Business Claimed input tax OUTPUT Goods (e.g. furniture, tableware, television) Services ( IT, Consultancy) GST on outputs = Output tax 4
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 & services 5
Output Tax GST charged on taxable supplies (sales of goods / services) deemed supplies disposal of business assets private use of business asset imported services goods sold in satisfaction of a debt gifts costing more than RM 500 6
Disposal of Assets Sale of capital assets, other than TOGC subject to GST Sale of assets as TOGC not subject to GST (not a supply) Given free the value will be the open market value subject to GST (>RM500) Sell as scrap the value will be the sale value of scrap subject to GST 7
Imported Services Malaysia IT Tex_.UK ABC Sdn.Bhd (Taxable person) Value of Services = RM10,000.00 GST = 6% X RM10,000 = RM600 GST-03 OUTPUT TAX = RM600 Port overseas INPUT TAX = RM600 8
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Issuance of Tax Invoice Tax invoice shall be issued by every registered person who makes any taxable supply in the course or furtherance of any business in Malaysia Tax invoice can be issued to the customer either : Hard copy Electronic Tax Invoice Must issue within 21 days after supply has taken place (Time of supply) Containing prescribed particulars 10
Tax Invoice Types of tax invoice when making taxable supplies full tax invoice simplified tax invoice 11
Tax Invoice Full Tax Invoice The following particulars are required in the full tax invoice; (a) the words tax invoice in a prominent place; (b) the tax invoice in serial number; (c) the date of issue of the tax invoice; (d) name of supplier, address and GST identification number; (e)the customer s name (or trading name) and address; (f)a description sufficient to identify the goods or services supplied (g) for each description distinguish the type of supply for standard rate, zero rate and exempt, the quantity of goods or the extent of the services and amount payable, excluding GST; (h) any discount offered; (i) the total amount payable excluding GST, the rate of tax and the total tax chargeable shown as a separate amount; (j) total amount payable including the GST charged; and (k) any amounts referred to (i) and (j) must be expressed in Malaysian currency. 12
Example of Full Tax Invoice Supplier s name, address and GST identification number Customer s name & address KILANG KASUT SEDAP PAKAI SDN.BHD. Lot 123, Jalan Pengkalan, 31500 Lahat, Perak (GST ID No : 100001/2015) Tel : 05-3349876 To : Syarikat Kasut Ali Sdn. Bhd. No. 27, Jalan Maju Jaya, 31400 Ipoh, Perak TAX INVOICE Invoice No: 0001111 Date : 25 Jun 2015 D/O No : S000345 Tax Invoice serial number Date of Tax Invoice The words Tax Invoice clearly indicated Serial No. Description Quantity Unit Price (RM) Total (RM) 1. 2. 3. School Shoes SS1201 School Shoes SS1210 Sport Shoes SP2315 200 200 50 8.00 10.00 25.00 1,600.00 2,000.00 1,250.00 4,850.00 Total amount payable, excluding GST Quantity of goods or extent of the services supplied Discount @ 10% Total before GST (485.00) 4,365.00 Total amount of GST charged Add GST @ 6% 261.90 Total Sales 4,626.90 Total amount payable, inclusive of GST Rate of GST KILANG KASUT SEDAP PAKAI SDN.BHD.
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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) 15
Input Tax Credit Prerequisite for ITC: Claimant must be a taxable person Must have a valid tax invoice full tax invoice simplified tax invoice - claim the input tax up to a limit of RM30.00 if name and address of recipient is not stated in invoice (GST at 6%) invoice issued by approved person under Flat Rate Scheme Customs No 1 /Customs 9 (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 16
Input Tax Mechanism Input Tax Credit 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 return required to be made 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 17
Non Allowable Input Tax Blocked input tax passenger motor cars including hiring of car family benefits club subscription fee medical and personal accident insurance medical expenses entertainment expenses for family members and potential clients 18
Blocked Input Tax Passenger motor car adapted for carrying not more than 9 passengers including the driver unladen weight of which does not exceed 3000kg Exclusion public service or tourism motor cars hire and drive cars or cars for sale by second hand dealers cars used for driving instructional purposes cars forming part of stock in trade cars used exclusively for business purposes approved by Director General 19
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 20
Blocked Input Tax Club subscription fee any joining fee, subscription fee, membership fee, transfer fee or other consideration charged by any club, 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 21
Blocked Input Tax Medical and personal accident insurance Any payment or contribution for insurance contracts:- To insure and cover the cost of medical treatment as well as cost of personal accident in which the insured is any person employed by the taxable person 22
Blocked Input Tax Medical expenses any medical expenses in connection with the provision of medical treatment to any person employed by a taxable person Entertainment expenses Spouse or family members Potential clients Employees Clients 23
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Exemption under s14(2) CA 1967 14.(2) The Minister may in any particular case (a) exempt any person from the payment of the whole or any part of the customs duties or any other prescribed fees or charges which may be payable by such person on any goods; or (b) direct the refund to any person of the whole or any part of the customs duties or any other prescribed fees or charges which have been paid by such person on any goods, 25
Different Treatment Treatment Current GST Exemption Import Duty Import Duty Sales Tax GST payable Goods Raw material/components Raw material/components Machine Machine 26
Facilities under GST Special schemes: Special schemes are introduced to alleviate negative cash flow impact to businesses Approved Trader Scheme (ATS) 27
Approved Trader Scheme (ATS) Under ATS ATS participants are allowed to suspend GST on the importation of goods Goods imported is used in the course or furtherance of business The amount of GST suspended needs to be declared in the GST return for the taxable period to which the suspension relates GST Regulation provides : Definition Application for approval Eligibility for ATS Goods not eligible for the scheme Commencement and expiry of the scheme Revocation of approval 28 28
Approved Trader Scheme Malaysia ATS approval AA Pte Ltd XX Sdn Bhd GST-03 (June 2015) Port (June 2015) Value of imported Goods (CIF + Duty Import )= RM100000 GST 6%= RM6000 overseas Total value of goods imported under ATS = RM100,000 Total value of GST suspended= RM6000 Customs no.1 SPL1122334455 GST is suspended 29
GST Return 30
ATS Persons eligible for ATS Companies located within Free Industrial Zone (FIZ) Licensed Manufacturing Warehouse (LMW) International Procurement Centre (IPC) Regional Distribution Centre (RDC) Toll manufacturers under ATMS Jewellery manufacturers under AJS Companies with turnover above RM25 million and at least 80% of their supplies made are zero-rated; or Any other person approved by the Minister 31
ATS Approval subject to the following criteria: Must be registered under Sec. 20 of the GST Act 20XX Must make wholly taxable supply Must be a registered user of electronic service Must submit monthly GST return Must make declaration on the importation of goods electronically Must have good compliance record as a GST payer Must have good accounting and internal control system Must furnish security if required; and Any other conditions as may be determined by DG 32
ATS Administratively the RMC will monitor the approval Application can be made in a Special Scheme Form Status of the applicants Sales turnover and the details of zero-rated supplies per annum Approval would be given for a period of 2 years Approval subject to renewal and notices would be sent 2 months before expiry date. Second notice will be issued 14 days before expiry date The approval of this scheme will be revoked by DG if provided false, misleading or inaccurate declaration ceased to satisfy any eligibility requirements failed to comply any conditions imposed applied to deregister by the approved person 33
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Agenda A SUPPLY SPANNING GST B REGISTRATION 35
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 to GST Exception to general rule Supply of warranty Provision of goods where sales tax has been charged Provision of services where service tax has been charged Non-reviewable contracts 36
Payment / invoices on supply of goods BEFORE GST ON OR AFTER GST IMPLICATION ON GST Taxable goods supplied (available / removed) Invoice issued with sales tax Full Payment received / part payment received with sales tax paid Invoice issued / Payment received by non-licensee Invoice issued / Payment received Payment received / Invoice issued Taxable goods supplied Taxable goods supplied Taxable goods supplied Supply non-taxable goods under Sales Tax Act 1972. Subject to SALES TAX Subject to sales tax Subject to sales tax on the whole supply or part of the supply that relates to payment of sales tax Value of supply deemed inclusive of GST and account in the 1 st taxable period after the appointed date Value of supply deemed inclusive of GST and account in the 1 st taxable period after the appointed date 37
Supplies spanning GST Before GST On or After GST Implication on GST Prescribed Services supplied Payment received / service tax charged or paid Payment received / invoice issued Goods imported Payment received Prescribed Services supplied Non-prescribed services supplied Prescribed services supplied by nonlicensee Release from customs control Not subject to GST Subject to service tax Not subject to GST Subject to service tax Value of supply deemed inclusive of GST and account in the 1 st taxable period after the appointed date Subject to GST and date of importation is when released from customs control 38
Registration Mandatory: Provide taxable supplies of goods and services and taxable turnover has reach threshold of RM 500,000 Calculation of taxable turnover for registration is based on total value of taxable supplies for 12 mths period. Voluntary Registration Registration of Branches Group registration
How to Access TAP? 1. Through Customs Portal (www.customs.gov.my)
How to Access TAP? 2. Through GST Portal (www.gst.customs.gov.my) Click Here
1. Click the [Register For GST] hyperlink Register for GST
1. Click [Next] to continue to the next step Register for GST
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Taxable period Regular 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 turnover not exceeding RM5 million monthly basis for businesses with annual turnover exceeding RM5 million A taxable person may apply to be placed in any other category other than his pre-determined taxable period 46
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Submission of GST Returns Filing of Returns GST returns must be submitted not later than the last day of the month following the end of the taxable period Electronic filing is encouraged 48
Submission of GST Returns GST Return must be submitted for any condition as follows: Payment Refund No payment : output tax > input tax : output tax < input tax : output tax = input tax no output tax, no input tax (nil return) Late filing return commits an offence and be liable to a fine not exceeding fifty thousand ringgit or to imprisonment not exceeding 3 years or to both 49
Submission of GST Returns When to submit GST Return monthly taxable period quarterly taxable period 50
Submission of GST Returns GST charged on taxable supplies less GST paid on business purchases equal Output Tax Input Tax minus (-) Net GST plus (+) Refund to taxable person Pay GST to Government 51
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BUSINESS PREPARATION FOR GST Government System & Processes Human Resource GST Readiness Accounting & Finance Sales & Marketing Purchasing & supply chain Special Refund 53
BUSINESS PREPARATION FOR GST GST Implication on System review system and processes perform complete mapping of transactions to identify required changes GST liability on every transaction and deadlines use of online submissions to tax agency computerised system ready made software upgrading present system 54
BUSINESS PREPARATION FOR GST GST Implication on the Repeal of Sales Tax and Service Tax Chargeability Facilities under the taxes repealed Taxable goods and services Non taxable goods and services Invoices issued and payment received before implementation date Invoices issued or payment received after implementation date Obligation to submit return and pay tax Invoice issued deemed inclusive of GST 55
BUSINESS PREPARATION FOR GST GST Implication on Registration can choose to be in the GST system are required to be in the GST system pre-registration registration exercise begins 6 months before date of GST implementation mandatory registration to register 3 months before date of GST implementation voluntary registration input tax consideration consumer profile 56
BUSINESS PREPARATION FOR GST Areas Pricing Policies Stock Management GST Implications Change in selling price to reflect GST replacing SST Negotiate with suppliers/vendors on prices of raw materials/trading stocks Input tax claimable Review procurement policy to avoid cascading effect To assess customers reaction on price Anti Profiteering Act will come in force Monitor business stocks (e.g. raw materials) - Special refund conduct stock take - Deregistration 57
BUSINESS PREPARATION FOR GST Areas Cash Flow GST Implications Need to analyze cash flow impact to assess the need to create a one time fund to cater for GST payment up-front cash maybe recovered from customer before GST is due Credit Terms Need to review credit terms and issuance of invoice timing differences may impact cash flow of business may result making payments of GST before collection from customers 58
BUSINESS PREPARATION FOR GST Areas Bad debts Advertising GST Implications Ensure a proper matching of payment of tax to government and payment received from customers Ensure GST compliance by reviewing the accounting / recording system Bad debt claims evidence of reasonable efforts to recover the debt Requirement to show price as GST inclusive 59
BUSINESS PREPARATION FOR GST Areas Invoicing GST Implications Identify type of each supply - Standard Rate, Zero Rate, exempt or out of scope Pricing GST inclusive / exclusive Simplified Tax invoice Full tax invoice necessary Accounting system able to capture and keep track GST in financial year Systems / software On line submission to Customs Department Enhance existing system 60
BUSINESS PREPARATION FOR GST Areas Staff Training Contract GST Implications To upgrade understanding of GST To avoid unnecessary mistake False/wrong information declared may open for audit case Monitor business stocks (e.g. raw materials) - Special refund - conduct stock take Computerised accounting system Legal advice with regards to contract Avoid long term contract without legal review 61
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INQUIRY 1 Ketua Setiausaha, Perbendaharaan Malaysia Panel Kajian Semula Cukai Komplek Kementerian Kewangan, No.5, Persiaran Perdana, Pusat Pentadbiran Kerajaan Persekutuan Malaysia, 62596 PUTRAJAYA. Tel : 03-88823000 2 Customs Call Centre (CCC) Tel: 03-78067200 Fax: 03-78067599 Email: ccc@customs.gov.my 3 GST PORTAL gst.customs.gov.my 63