1 GOODS AND SERVICES TAX. ROYAL MALAYSIAN Customs . General Guide . Publication Date Revised: 24 August 2017. The General Guide revised as at 12 July 2017 is withdrawn and replaced by the General Guide as at 24 August 2017. Copyright Notice Copyright 2016 Royal Malaysian Customs Department. All rights reserved. Subject to the Copyright Act, 1987 (Malaysia). The Guide may be withdrawn, either wholly or in part, by publication of a new Guide . No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form, including on-site for commercial purposes without written permission from the Royal Malaysian Customs Department (RMCD). In reproducing or quoting the contents, acknowledgment of source is required. Disclaimer This information is intended to provide a General understanding of the relevant treatment under Goods and Services Tax and aims to provide a better General understanding of taxpayers' tax obligations.
2 It is not intended to comprehensively address all possible tax issues that may arise. While RMCD has taken the initiative to ensure that all information contained in this Guide is correct, the RMCD will not be responsible for any mistakes and inaccuracies that may be contained, or any financial loss or other incurred by individuals using the information from this Guide . All information is current at the time of preparation and is subject to change when necessary. General Guide . As at 24 AUGUST 2017. CONTENTS. INTRODUCTION .. 1. General Guide .. 1. Other Related Guides .. 1. SCOPE OF TAX .. 1. Charge to Tax .. 1. Supply of Goods or Services .. 2. Taxable Person .. 3. Business .. 3. Made in Malaysia .. 4. REGISTRATION FOR GST .. 4. Liability to Register .. 4. Taxable Turnover .. 5. Calculation of Taxable Supplies for GST Registration .. 5. Determination of Twelve Months Period .. 6. Effective Date of Mandatory Registration .. 7.
3 Voluntary Registration .. 7. Application for GST Registration .. 8. Registration : transfer of a business as a going concern (TOGC).. 9. Registration of Persons Making Zero-rated 9. Registration of an Agent .. 9. Registration of societies or similar organisations .. 10. Personal representatives .. 11. Group Registration .. 11. Single Taxable 13. i General Guide . As at 24 AUGUST 2017. Joint Venture .. 13. Registration of Branches or Divisions .. 13. Responsibilities of a Registered Person .. 14. End of Registration .. 14. Cancellation of Registration .. 15. General 16. SUPPLY .. 16. Place of 16. Value of Supply .. 19. Time of 22. IMPORTED SERVICES .. 30. Implication of GST on Imported Services .. 30. Value of the Supply of Imported Services .. 33. Issuance of tax invoice is not required for an imported service .. 34. EXPORTED SERVICES .. 34. IMPORTED AND EXPORTED 36. Imported Goods .. 36. Exported 37. TAX INVOICE AND RECORD KEEPING.
4 37. Tax Invoice .. 37. Record Keeping .. 46. CREDITS NOTES, DEBIT NOTES, BAD DEBT RELIEF AND ADJUSTMENTS .. 47. Credit Notes and Debit Notes .. 48. Bad Debt Relief .. 49. TAXABLE PERIOD, ACCOUNTING BASIS, FURNISHING OF RETURNS AND. PAYMENT OF TAX .. 51. ii General Guide . As at 24 AUGUST 2017. Taxable Period .. 52. Accounting Basis .. 53. GST Return .. 54. Payment .. 56. Penalty for late payment of tax .. 56. GST Declaration and Payment by Non Taxable Person .. 58. INPUT TAX CREDIT .. 58. Input 59. Mechanism to Claim Input Tax .. 59. Allowable Input Tax .. 59. Criteria for Claiming Input Tax .. 60. Blocked Input Tax .. 60. Incidental Exempt Financial Supplies .. 63. Refund of Input Tax .. 65. Input Tax in Relation to Registration .. 65. Input Tax in Relation to Special Transactions and Special Schemes .. 67. Input Tax in Relation to Own Use .. 69. Input Tax in Relation to Change of Use .. 70. Input Tax in Relation to Accounting Basis.
5 70. PARTIAL EXEMPTION .. 71. Partial Exemption .. 71. Methods of 72. Annual Adjustment .. 73. De Minimis Rule .. 73. CAPITAL GOODS ADJUSTMENT .. 74. Capital Goods Scheme .. 74. iii General Guide . As at 24 AUGUST 2017. 74. Non applicability of the adjustment .. 74. REFUND AND REMISSION .. 75. Refund .. 75. Remission .. 77. SPECIAL TREATMENT/TRANSACTIONS .. 78. E-Commerce .. 78. Vouchers, Tokens and 78. Employee Benefits .. 79. Societies and Similar Organizations .. 80. Charitable Entities .. 80. Transfer of a Business as a Going Concern .. 81. Joint Venture Under Production Sharing Contract .. 82. Repossession .. 83. Auction .. 84. Agent .. 84. Relief for Second-Hand Goods .. 85. Warehousing Scheme .. 86. Flat Rate Scheme .. 87. Approved Trader 87. Approved Toll Manufacturer Scheme .. 88. Approved Jeweller Scheme .. 89. Capital 90. Disbursement .. 90. AUDIT AND ASSESSMENT .. 93. 93. iv General Guide . As at 24 AUGUST 2017. Period Covered by Audit.
6 93. Types of Audit in GST .. 93. Place of Audit .. 94. Responsibilities of Taxable 95. Assessment .. 95. GST RULINGS .. 97. Public 97. Advance Ruling .. 97. REVIEW AND APPEAL .. 98. Review and Revision .. 98. Appeal .. 99. INQUIRY .. 100. FURTHER ASSISTANCE AND INFORMATION ON GST .. 100. APPENDIX 1 .. 101. AMENDMENTS .. 103. v General Guide . As at 24 AUGUST 2017. INTRODUCTION. General Guide 1. This booklet is a General Guide on Goods and Services Tax (GST). It is part of a series of educational materials made available to help businesses and organizations prepare for GST implementation in Malaysia. Other Related Guides 2. Besides the General Guide on GST, industry guides are also made available specifically to provide guidance to businesses and organizations operating in specific industries. SCOPE OF TAX. 3. This section will explain to you the scope of GST in Malaysia. The scope of GST includes the following:- (a) What is subject to GST?
7 (b) Who can charge GST? Charge to Tax 4. GST is charged on:- (a) any taxable supply of goods and services;. (b) made in the course or furtherance of any business;. (c) by a taxable person; and (d) in Malaysia. 5. GST is also charged and levied on the importation of goods and services into Malaysia. All imported goods except goods prescribed as zero-rated and exempt or given relief from the payment of GST, will be subject to GST. All imported services acquired for the purpose of business except exempt supply of services will be subject to GST. The GST on imported services is payable by the recipient of the 1. General Guide . As at 24 AUGUST 2017. services using the reverse charge mechanism. Supply of Goods or Services 6. The definition of supply covers all forms of supply where goods and services are given in return for a consideration. Consideration received can be in the form of monetary payment or payment in kind (barter). 7.
8 Supplies can be in the form of goods or services. A supply of goods involves the transfer of ownership of the goods from one person to another person. Goods mean any kind of movable and immovable property such as machinery, motor vehicle and house. For example, a person supplies goods if he transfers goods permanently out of the business under a sale arrangement. However, goods do not include money. 8. Anything that is not a supply of goods is regarded as a supply of services and this may include a transfer of possession of goods with no intention to transfer the ownership. Examples of supply of services are:- (a) lending of goods;. (b) renting of goods;. (c) provision of telecommunication services; and (d) professional services. 9. Goods and services may be supplied for no consideration. Under this situation, such transactions may be deemed as a supply. Examples are disposal of business assets without consideration, gifts which cost more than five hundred ringgit ( ) and private use of business assets.
9 (a) Taxable Supply A taxable supply means a supply of goods or services other than an exempt supply. A taxable supply is either a standard-rated or a zero- rated supply. Standard-rated supply is subject to a positive tax rate of 6%. A zero-rated supply is a taxable supply which is subject to a tax rate of zero percent (0%). The supplier does not collect any GST but is 2. General Guide . As at 24 AUGUST 2017. regarded as making a taxable supply and is eligible to claim GST. incurred on inputs. Zero rated supplies are listed under the Goods and Services Tax (Zero-Rated Supply) Order 2014. (b) Exempt Supply An exempt supply is not a taxable supply. An exempt supplier cannot charge GST and therefore cannot claim refund of GST on inputs acquired. Exempt supplies are listed under the Goods and Services Tax (Exempt Supply) Order 2014. Taxable Person 10. A person includes an individual, sole proprietor, partnership, corporation, Federal Government, State Government, statutory body, local or public authority, society, club, trade union, co-operative, trustee and any other body, organization, association or group of persons whether corporate or unincorporated.
10 11. A taxable person is a person who is or is liable to be registered under the Goods and Services Act 2014 (GSTA). A taxable person is a person who makes taxable supplies in Malaysia and whose annual turnover exceeds the prescribed threshold of RM500,000. Such person is liable to be registered under the GSTA. However, in some cases, a person who is not liable to be registered for GST, registers voluntarily for GST. In this situation, he is also a taxable person. Business 12. Business includes any trade, commerce, profession, vocation or any other similar activity whether or not for pecuniary profit. This means that financial profitability is not a criterion in determining the status of business. 13. The following criteria may be used to determine whether an activity qualified as a business for GST purpose:- (a) It is a serious undertaking or work earnestly pursued;. (b) It is pursued with reasonable or recognizable continuity.