Customs GST Seminar

Real Property
Accounting for GST

CHAN TEK KAI

Penolong Kanan Pengarah Kastam II
GST UNIT
ROYAL MALAYSIAN CUSTOMS
DEPARTMENT

17 NOVEMBER 2014

1
 BriefingAgenda
1. Issue related to Properties Developer
2. Charging Output Tax

3. Entitlement of Input Tax

4. Apportionment Rules

5. GST Adjustments
6. Filing of GST Return
2
1
Issue related to
Properties Developer

3
 TIE-IN GIFTS
• The value of the gift is reflected in the price of the principal
goods supplied
 Not subject to GST
However, if the gift is used for making exempt
supply, the registrant cannot claim ITC
• Example
 developer gives Astro decoder to residential house
buyer
 the supply of the decoder by the developer is not
subject to GST
• Subject to Gift Rule
4
 Supply of goods
Consideration + GST

subject to Gift rule

(para 5(2) 1st Sch

Property Buyer
Residential/comme
rcial

5
 GST TREATMENT ON PROPERTY

Suspension Of Work
Not subject to GST if:
 Payment made as compensation for the loss of
income or for costs incurred as a result of
suspension of work.

Subject to GST if:

 consideration for the supply made by the main
contractor prior to suspension of work
 These services have been performed and billed
6
 PARKING LOT AND MAINTENANCE

Exempt supply if
made by taxable person to the owner of residential
property (recipient) regardless whether with or without
consideration
ancillary to the supplies of residential properties.

Standard supply if
Recipient is not the owner of the residential property
The property is a non residential property

7
 OTHER RELATED ISSUE

• Furniture and fitting that are sold together

with the residential unit are subject to GST
 Required to account GST on the
furniture and fitting
• Exempt any supply of goods under fourth
schedule of Housing Development Act

8
 GST TREATMENT ON PROPERTY

Treatment of Deposit
 Deposit given or payment of booking fee in
respect of a supply
 is not regarded as payment unless
developer applies as consideration.
 If payment received upon signing of S & P that
payment will form part payment
 Subject to GST

9
 OTHER RELATED ISSUES
Acquisition of Government and Statutory Services

• OUT OF SCOPE
 all supplies by government
 All acquisitions of services and fees imposed by the
Government related to real estate ( premium charges,
conversion premium, licence, registration, search and
transfer fees )
 assessment rate imposed by the local authorities

10
 • STANDARD RATED
• Apply for extension of water / electricity- 80% project completed.
 Applications be made within 3-5 months prior to the date of such
supply.

• Contribution fees made to Water Authorities, IWK and TNB

 Water Authorities – RM 300
 TNB – RM 450

(The amount to be paid due:

(i) to the charges for the planting of the cable (TNB)
(ii) to test the water pressure on the site(SYABAS).)

11
 RETENTION SUM

• General concept under Contract Agreement

 the amount of progress billings not paid until the conditions
specified in the contract for the payment of such amounts have
been met or until defects have been rectified.

 Construction contracts provide for a contractor to render progress

billings as work on a contract progresses.
 contractor be paid, usually after the relevant part of the work
has been satisfactorily completed, as certified.
 developer to withhold a percentage from the payment of each
progress billings pending satisfactory completion of the entire
contract.

12
 GST TREATMENT ON RECTIFICATION OF DEFECTS

After taken possession by the purchaser( main contractor is required to

carry out such rectification works during the defect liability period)

Scenario (a)
If developer ("D") hires another sub-contractor ("SC") to do the
rectification:
 ("SC") supplies his construction service to ("D").
 If SC( Registered person), has to charge ("D") GST on the supply of
construction services( rectification works performed).
 ("D") then charged GST on the supply this construction services to
"MC").

13
 GST TREATMENT ON RECTIFICATION OF DEFECTS

Supply of construction
services to D(inv and
charge GST)

MC D Supply of property P

Onward supply of
construction services
(inv and charge GST on
rectification work

Rectification work =
Supply of construction
10,000.00
Retention sum 50,000.00 services to D

SC

14
 OTHER RELATED ISSUES
Loan of stock and equipments
• Raw materials on loan
 it is a supply, because the materials is used and the
replacement will not be the same materials (similar or same
kind of materials)
 will attract GST

• Equipments on loan
 Supply of services as it will be returned to the owner
 subject to GST

15
16
 Purchaser
Joint
acquisition of Developer
land and
services to Sale Purchaser
construct of
and sell Lots Landholder Lots

Purchaser

Joint Development
Purchaser

17
 Acquisitions
of materials
and services

Purchaser

Developer
Purchaser

Provide Proportion
services of profit
Purchaser

Land
owner Sale of Purchaser
completed
Lot

18
 SCENARIO 1- VALUE AND TIME OF SUPPLY

19
 SCENARIO 2- VALUE AND TIME OF SUPPLY

20
 SCENARIO 3- VALUE AND TIME OF SUPPLY

21
 SCENARIO 3 CONT:- VALUE AND TIME OF SUPPLY

22
2

23
 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
24 24
 Types of supply - exempt
 Services
 Domestic transportation of passengers for mass public transport by
rail (LRT, ERL etc), ships, boats, ferries, express bus, stage bus,
workers‟ bus, school bus, feeder bus and taxi

 Toll highway

 Financial services

 private healthcare provided by approved healthcare facilities

 Education(pre school –tertiary) registered under related Acts.

 Childcare services
25
 Types of supply - exempt

Services
 The supply of services by management corporation and joint
management bodies to owners in low and low medium cost
housing held under strata title
 Funeral, Burial and Cremation Services in a package
Goods
 Residential property
 land for agricultural purposes and land for general use
(government building and burial ground)
 Investment gold

26
 Types of supply – zero rated
 Goods
 Agriculture products - paddy, fresh vegetables & fruits
 Foodstuff - rice, sugar, table salt, plain flour, cooking oil, mee kuning,
laksa, kuey teow , bihun, bread, (the, kopi, coco) powder
 Livestock supplies - live animals and unprocessed meat
 Poultry & eggs
 Fish – live, fresh, frozen, dried
 The supply of the first 300 units of electricity to domestic users
 The supply of water to domestic users
 Exported goods/ exported services
 Education - text book, exercise books, newspaper
 Medicine - 2900 drugs under NEM List are zero rated
27 27
 Output Tax
GST charged on
 taxable supplies
 sales of goods
 provision of services
 deemed supplies
 disposal of business assets
 private use of business asset
 imported services
 goods supplied by overseas supplier via agents,
contract or toll manufacturers (drop shipment)
 gifts costing more than RM500
28 28
 Output Tax
Supplies not subject to GST
 cash donation or grants where a person does
not get benefits
 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

29 29
 ITC ON PROPERTY DEVELOPMENT
EXCEPTION
• INPUT TAX ON TAXABLE SUPPLY ON RESIDENTIAL

 Allowed Input tax attributable to taxable supply on residential

properties

 With( norminal value) or without consideration

 made by a taxable person to any public body
 such supply of goods by the taxable person is made in compliance with
the requirement enforced by any Public body

 (ii) Relieve under Sec 56(3)

 any person or class of person from the payment of the tax charged on
such taxable supply
 Taxable person from charging tax on such taxable supply
30
 ITC ON PROPERTY DEVELOPMENT

ITC
Claimable

JKR
Road SYABAS
KL DEVELOPER TNB
Substation
KL Sewerage GOVERNMENT
Develop Reservoir
er school

Relieve from charging and

payment of tax
31
 Issuance of Tax Invoice

Types of tax invoice

 full tax invoice
 simplified tax invoice

32 32
 Serial number
Supplier
Identification

The words “tax

invoice” in a Date of invoice
prominent place

Name and
address of
person being The total amount
supplied payable excluding
tax, the rate of tax
and the total tax
chargeable shown
as a separate
amount.
Sufficient
description The total amount
payable including
the total tax
33
chargeable 33
Supplier
Identification

Date of invoice

Sufficient
description

The total amount

payable including
tax

34 34
2

35
 Allowable Input Tax
Supplies
 taxable supplies
 standard rated or zero rated supplies
 disregarded supplies (supplies within group, supplies
made in warehouse and supplies between toll
manufacturer and overseas principal)
 supplies made outside Malaysia which would be taxable
supplies if made in Malaysia

36 36
 Supplies Made Outside Malaysia

B
Factory

Inputs: Purchase
clothes
office Supplies
rental, clothes
utilities, A
office
furniture Operational
Headquarters

issue
invoices
C
37
 Allowable Input Tax
Incidental 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 38
 Incidental Financial Supplies
Special tax treatment does not apply to:
 commercial or investment bank or money broker
 development financial institutions or money lenders
 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
39 39
 Non Allowable Input Tax
Blocked input tax
 passenger motor cars including hiring of car

Repair, maintenance and refurbishment of passenger motocar.

 family benefits
 club subscription fee
 medical and personal accident insurance
 medical expenses
entertainment expenses

40 40
 Criteria To Claim Input Tax
Must hold valid document:
 tax invoice
 full tax invoice for any amount of tax payable
 simplified tax invoice
• claim input tax up to a limit of RM30.00
 tax invoice in the name of taxable person
 tax invoice issued by approved person for Flat Rate Scheme
 Customs No 1 for imported goods
 Customs No 9 for goods removed from bonded warehouse
 document to show claimant pays imported services

41 41
4

42
 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
43 43
 ACCOUNTING FOR GST

HOWEVER
Input tax attributable on any exempt supplies of land
for general use is claimable if :---
made by a taxable person
such supply made to any public body(recipient)
such supply of goods by the taxable person is made in
compliance with the requirement enforced by any
public body

“public body” means Federal Government, State Government, local

authority and statutory body
44
 Apportionment Rules

Inputs
used

Wholly attributable Wholly attributable

to taxable supplies to exempt supplies

Claim 100% Attributable to Cannot claim

input tax both taxable and input tax
exempt supplies

Apportionment
rules apply

45 45
 Apportionment Rules
Mechanism for input tax apportionment
 Turnover-based method as a standard method for
apportioning any residual input
Value of taxable supplies
Taxable portion =
Value of all supplies

 round up or down to the nearest two decimal

places
Input tax claimable = Taxable portion X Residual input tax
46 46
 Apportionment Rules
Example:
Taxable supplies = RM300,000
Exempt supplies = RM250,000
Residual input tax= RM8,000
RM300,000
Taxable portion =
RM300,000 + RM250,000
= 54.5454%
= 54.55% (2 decimal places)
Input tax claimable = 54.55% X RM8,000

47
= RM4,364 47
 Apportionment Rules

Mechanism for input tax apportionment

 an initial apportionment for the taxable period
 adjustment to the initial apportionment must be
made annually to reflect change of use (partial
exemption)
 if value of capital assets is RM100,000 or more,
require to make capital goods adjustments to
reflect change of use of capital goods
48 48
 Capital Goods Adjustment

Interval
 Fixed period of time during which the
proportional taxable usage of a capital
item is re-evaluated
 Land and building - 10 intervals
 Any other capital items - 5 intervals
 Inclusive of both the first and final intervals
49 49
4

50
 Adjustments
Adjustments to input tax and output tax
 when the taxable person receives debit notes or issues
credit notes
 bad debt relief
 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 accounting basis

51 51
 Adjustments
Adjustments due to credit note issued
 credit note is issued when the amount previously invoiced is
reduced or a transaction is cancelled
 supplier reduces output tax in the return for the taxable period
in which the credit note was issued
 customer reduces input tax in the return for the taxable period
in which he received the credit note
Adjustments due to debit note issued
 debit note is issued when the amount previously invoiced is
increased
 supplier increases output tax in the return for the taxable
period in which the debit note was issued
 customer increases input tax in the return for the taxable
52
period in which he received the debit note 52
 Adjustments
Company A (seller)
 sell goods on 20 June 2015 for RM2,500
 accounts output tax : RM2,500 x 6% = RM150
 received returned goods on 10 August 2015 (adjustment)
 reduces output tax : RM530 x 6/106 = RM30

Company B (Buyer)
 20 June 2015
 claims input tax : RM2,500 x 6% = RM150
 10 August 2015 (adjustment)
 reduces input tax : RM530 x 6/106 = RM30
53 53
 Adjustments
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
 input tax amount to claim
A1
input tax = x C
B
where
A1 is the payment not received in respect of the taxable supply
B is the consideration for the taxable supply
C is the tax due and payable on the taxable supply
 customer accounts as output tax in the return for the taxable
period in which the bad debts are given relief
54 54
 Adjustments
Acompany makes a supply and issues a tax invoice for RM53,000
inclusive of GST on 10 January 2016
The company accounts RM3,000 as output tax.
On 5 May 2016, the customer pays RM42,400.
The balance of RM10,600 is unpaid.
RM10,600
input tax claimable = x RM3,000
RM53,000
= RM600

Customer accounts RM600 as output tax

55 55
 Adjustments
Adjustments due to payment received in respect of bad debts
 customer makes payment in respect of bad debts
 supplier accounts as output tax in the return for the taxable
period in which the payment is made
 output tax amount to account
A2
output tax = x C
B
where
A2 is the payment received in respect of the taxable supply
B is the consideration for the taxable supply
C is the tax due and payable on the taxable supply
 customer accounts as input tax in the return for the taxable
period in which the payment is made
56 56
 Adjustments
Taking the earlier example:
On 5 August 2016, the customer pays RM8,480.
The balance of RM2,120 is still unpaid.

RM8,480
Output tax to be accounted = x RM3,000
RM53,000
= RM480
Customer claims RM480 as input tax

57 57
5

58
 ACCOUNTING FOR GST
Time of Supply and Accounting Period
• Sale of uncompleted non-residential property under
progress payment by developers
 account for GST at the various stages of the
progress / scheduled payment based on the earlier
 a tax invoice has been issued or
 payment is received

59
 ACCOUNTING FOR GST
Time of Supply and Accounting Period (cont)

• GST be accounted on the sale of a completed non

residential property
Stage 1 - At the stage of signing
S&P
• GST should be accounted at
the earlier of the following
 when a tax invoice is
issued or
 when payment is
received
60
Stage 2 - At the stage of transfer
• GST should be accounted at the
earlier of the following
 when a tax invoice is issued
 when payment of the
balance of the purchase
price is received
 when the property is made
available to the purchaser or
 when the transfer is effected
 Time of supply
Basic Tax Point
 basic tax point for supply of goods
 the time when the goods are removed
 the time when the goods are made available
 basic tax point for supply of services
 the time when the services are performed
 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
 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

61
61
 Time of supply rule

Time of supply is the date of tax invoice if it is issued within

21 days after the „basic time of supply‟

Actual Time
Tax invoice issued within 21 days
of supply

1 July 24 July 14 Aug 21 Aug

Goods removed Tax invoice

or Services issued
performed
Actual time of supply = 14 Aug

62
62
 Time of Supply Rule

Illustration of Time of Supply Rule

Scenario : payment or invoice before basic tax point

20 9 10
1 Jan Ordered Payment Invoiced Received
Mac Apr Mei

Contract signed Date of payment Tax invoice issued Goods removed /

Services performed

The ToS is treated as taking place at the earliest of the following events:
- The date when a tax invoice is issued
- The date when payment is received
 The time of supply is – Date of payment on 20 Mac

63
63
 Filing of GST Returns
Filing of Returns
 GST returns and
payments to be
submitted not later than
the last day of the
month following the end
of the taxable period
 Electronic filing is
encouraged
64
64
 Filing of GST Returns
When to submit GST Return
 monthly taxable period

 quarterly taxable period

65
65
 Filing of GST Returns
GST charged on
Output Tax
taxable supplies
less
GST paid on
Input Tax
business purchases
equal
minus (-) plus (+)
Net GST

Refund to Pay GST to

taxable person Government
66
66
 Filing of GST Returns
Sample of GST Return
 Calculation of output tax
• Value of taxable supplies made RM1,000,000 1

• Output tax RM 60,000 2

 Calculation of input tax

• Value of taxable supplies received RM 600,000 3

• Input tax RM 36,000 4

 Net tax payable/refundable

• GST payable (2 – 4) RM 24,000 5

67 • GST refundable (4 – 2) 6
67
 Filing of GST Returns
Sample of GST Return
 Calculation of output tax
RM1,000,000
• Value of taxable supplies made 1
RM 60,000
• Output tax 2

 Calculation of input tax

RM1, 600,000
• Value of taxable supplies received 3

RM 96,000
• Input tax 4

 Net tax payable/refundable

• GST payable (2 – 4) 5

RM 36,000
68 • GST refundable (4 – 2) 6
68
 Filing of GST Returns
GST Refunds
 14 working days for electronic submission
 28 working days for manual submission

69 69
 Customs GST Seminar

Preparing Business for

the Transitional Period

GST UNIT
ROYAL MALAYSIAN CUSTOMS
DEPARTMENT

70
 Briefing Agenda

1. Tax Code and GST Return

2. Supply Spanning GST
3. Special Refund
4. Preparation By Business

71
1
Tax Code and
GST Return
72
 TAX CODE FOR SUPPLY

Tax Tax Rate Description

Code

SR 6% Standard rated supply with GST charge. E.g sales of good or

provision of services in Malaysia.

Deemed Taxable Supply subject to GST e.g.

DS 6% - Disposal of business asset without consideration.
- Services given to connected person without consideration.
- Gift > RM500.

Disregard supply e.g.

GS 0% - Supply inter-company under group registration.
(GST not charge) - Supply under warehouse scheme.

73
 TAX CODE FOR SUPPLY

RS 0% Relief supply under GST e.g.

(No GST • supply granted relief under GST (relief) Order 2014.
Charge) - supply to government or local authority.

ZRL 0% Local supply of goods and services which are subject to zero rated
supply.
• refer GST (zero rated) Order 2014.
E.g. Basic food ( rice, sugar, salt, wheat flour, cooking oil )
Live stock ( chicken, duck, eggs…etc )

ZRE 0% Exportation of goods & services.

• Goods supply to oversea.
• Services will directly benefit the person who in oversea and not
related to any land and good in Malaysia

74
 TAX CODE FOR SUPPLY
Incidental Exempt Financial Supplies e.g.
ES43 0% • Deposit of money.
(N/A) • Exchange of currency.
• Loan to employees…etc.
Exempt supplies under GST e.g.
ES 0% • Supply of residential houses.
(N/A) • Supply of agriculture land.
• Supply of worker’s bus services.

OS 0% Out of scope supplies e.g.

(N/A) • Sales of goods in overseas.

AJS 6% Any adjustment to output tax e.g.

• Bad Debt Recovery.
• Customer did not pay to supplier after 6 month from the date of
supply.
• Credit note on sales.
• Debit note on sales.
75
 TAX CODE FOR PURCHASE

Tax Tax Rate Description

Code

TX 6% Purchase with GST at 6% and directly attributable to taxable

supplies.
( claim ITC 100% )

IM 6% Import of goods with GST incurred.

( claim ITC 100% if attributable to taxable supply )

IS 0% Import under special scheme with GST suspended e.g.

(GST payment • Under ATS ( Approved Trader Scheme )
suspended)

76
 TAX CODE FOR PURCHASE

BL 6% Disallowed Input Tax ( Blocked ) e.g.

(ITC Not • Purchase on passenger motorcar.
claimable) • Medical expenses.
• Family benefits…etc

NR 0% Purchase from Non Registered GST supplier.

(N/A)

ZP 0% Purchase from GST registered person with zero rated goods and
services.

77
 TAX CODE FOR PURCHASE

EP 0% Purchase exempted from GST e.g.

(N/A) • Purchase residential houses.
• Worker’s bus services.

OP 0% Purchase transaction which is out of the scope GST.

(N/A) • Purchase taking place overseas and not imported into Malaysia.

TX-E43 6% Purchase with GST incurred directly attributable to incidental

Exempt Financial Supplies.
• GST on loan agreement…etc.

78
 TAX CODE FOR PURCHASE

TX- N43 6% Purchase with GST incurred directly attributable to non incidental
Exempt Financial Supplies.
• Purchase of wallpaper to be use for residential houses.

TX-RE 6% Purchase with GST which are not directly attributable to taxable or
exempt supplies.
• Utilities ( rental, electricity, water )
• Legal fees, audit fees,…etc.

GP 0% Purchase transaction which is disregarded.

(GST payment • Purchase inter-company under group registration.
disregard) • Purchase under warehouse scheme.

Any adjustment made to input tax.

AJP 6% • Bad Debt Relief.
• Credit note on purchase.
• Debit note on purchase.
79
 Filing of GST Returns
GST charged on
taxable supplies Output Tax
less
GST paid on
business purchases Input Tax
equal

minus (-) plus (+)

Net GST

Refund to Pay GST to

taxable person Government 80
 Filing of GST Returns
Sample of GST Return
5) Calculation of output tax
a) Value of standard rated supplies made RM1,000,000
b) Output tax, Bad Debt Recovered, Other RM 60,000
Adjustment
6) Calculation of input tax
a) Value of standard rate acquisitions RM 600,000
b) Input tax, Bad Debt Relief, Other RM 36,000
Adjustment
 Net tax payable/refundable
7) GST payable (5b – 6b) RM 24,000
8) GST claimable (6b – 5b) 81
 Filing of GST Returns
Sample of GST Return
5) Calculation of output tax
a) Value of standard rated supplies made RM1,000,000
b) Output tax, Bad Debt Recovered, Other RM 60,000
Adjustment
6) Calculation of input tax
a) Value of standard rate acquisitions RM1, 600,000
b) Input tax, Bad Debt Relief, Other RM 96,000
Adjustment
 Net tax payable/refundable
7) GST payable (5b – 6b)
8) GST claimable (6b – 5b) RM 36,000 82
 Filing of GST Returns
9. Do you chose to carry forward refund for GST? Yes No
10. Total Value of Local Zero-Rated Supplies RM

11. Total Value of Export Supplies RM

12. Total Value of Exempt Supplies RM

13. Total Value of Supplies Granted GST Relief RM

14. Total Value of Goods Imported Under Approved Trader Scheme RM

15. Total Value of GST Suspended under item 14 RM

16. Total Value of Capital Goods Acquired RM

17. Total Value of Bad Debt Relief Inclusive Tax RM

18. Total Value of Bad Debt Recovered Inclusive Tax RM

83
2
Supply Spanning
GST
84
 Supplies Spanning GST
Meaning of supply spanning GST
payment or invoice before appointed date and supply takes place on and
after appointed date e.g. sales of goods, airline tickets and cinema

General Rule
any supply before appointed date not subject to GST
any supply on or after appointed date subject to GST
Exception to the general rule
supply of warranty
provision of services where service tax has been charged
provision of goods where sales tax has been charged
non reviewable contracts
85
 Supplies Spanning GST

BEFORE GST ON OR IMPLICATION ON

AFTER GST GST
Goods or services Invoice issued Not subject to GST
supplied or payment
received
Invoice issued or Goods or Value of supply
payment received services deemed inclusive of
supplied GST and account in
the 1st taxable period
after the appointed
date

86
3

Special Refund

87
 Special Refund

Entitle to special refund of sales tax if

claimant is registered (mandatory) person

hold goods on appointed date for making

taxable supply

goods are subject to sales tax

holds relevant invoices or import document to

show sales tax has been paid

88
 Special Refund
Goods not eligible for special refund

capital goods e.g. building and land

goods used partially or incorporated into other goods e.g. raw

materials, work in progress

goods for hire e.g. cars, generators

goods not for business e.g. personal use

goods not for sale or exchange e.g. containers, pellets,

stationeries, moulds, manufacturing aids

goods entitled to drawback

goods allowed sales tax deduction under Section 31A Sales Tax
Act 1972 (credit system)
89
 Special Refund
Manner to claim special refund
claim within 6 months from appointed date
for special refund < RM10,000 require audit certificate signed by
a chartered accountant
for special refund ≥ RM10,000 require audit certificate signed by
an approved company auditor
use special form to claim refund (manual or online)
to be given in eight (8) equal installments over a period of two
(2) years
to account as output tax if special refund is claimed and goods
are returned 90
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 Special Refund
Reduce special refund to 20%
(20% method)
purchase goods from non licensed manufacturers
goods are subject to sales tax
holds invoices which does not show sales tax has been
charged
claimant is a registered (mandatory) person
hold goods on appointed date for making taxable goods

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 Special Refund
20% method
reduce the actual purchase price by 80% for goods held on
hand on appointed date
Special refund = actual price x 20% x sales tax rate
Example:
Purchase RM15,000 of raw materials but holds RM10,000 on
appointed date
Special refund = RM10,000 x 20% x 10%
= RM200

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4
Preparation By
Business
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 Business Preparation
GST Implication on Registration
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

95
 Business 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
pass on saving
absorption of GST
Price Control and Anti Profiteering Act 2011
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 Business Preparation
GST Implication on Stock Management
monitor business stocks
purchase strikes and lulls
procurement policy
registration and deregistration
special refund
physical stock take on hand
documents to support refund
audit certificate
97
 Business Preparation
GST Implication on Cash Flow
need to analyse 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

GST Implication on Invoicing

identify whether standard rate, exempt, zero rate or out of
scope supply
issuance of full and simplified tax invoice
21 days rule
98
 Business Preparation
GST Implication on Output Tax

gifts > RM500 subject to GST

commercial samples in a form not ordinarily

available for sale to the public not subject to GST
deemed supply eg. private use and disposal of
business assets subject to GST

supplies to connected persons

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 Business 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 > RM500 to be supported by full tax invoice

100
 Business 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
101
 Business Preparation
GST Implication on System
perform complete mapping of transactions to identify required
changes and GST liability
use of online submissions to tax agency
computerised system
system processes
print receipts with GST amount
issue GST invoice
claim for refunds and bad debts
prepare GST returns and make adjustments
approach - internally, vendor, COTS
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Thank You
For Enquiries, please contact:

1300-88-500
03-8882 2111

www.gst.customs.gov.my
Email: gst@customs.gov.my
Fax: 03-7806 7599

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