What is GST?
GST is Goods and Services Tax which is a consumption tax on all supply of goods and services in Malaysia or imported into Malaysia.
This means consumers like you and I shall pay GST if we consume such goods and services (called taxable supplies) in Malaysia or imported into Malaysia.
It will replace the current Sales and Service Tax.
GST is a broad based tax which accounts for every stage of value add in the supply chain.
The GST which is standard rated at 6% will apply from 1 April 2015.
GST Input and Output
Companies and persons who are in business will be subject to GST for their purchases as inputs and account for outputs for their sales. These persons in business shall be allowed to claim back their inputs on purchases in their taxable returns to Royal Customs Department.
Registered Persons and GST Registration
Companies and persons in business shall qualify to be registered persons should their annual turnover exceeds RM 500,000 per calendar year.
The registration shall begin on 1 June 2014 for such eligible persons.
For companies which are in a Group, GST group registration can be applied to the DG for inter-companies GST transaction within the Group to be disregarded.
Taxable periods and GST Returns
Companies with turnover that exceeds RM 5 Million shall have taxable periods monthly and need to submit their GST returns under form GST03 on a monthly basis. For companies that have RM 5 million and less, their GST returns can be submitted quarterly.
Monthly GST returns by registered companies that qualifies shall need to be submitted by the end of that month say 1 April 2015, the GST returns to be submitted by 30 April 2015. Payment for the April returns must be made by 31 May 2015 that is the last day of the following month.
Failure to ensure these dates shall be imposed huge penalties of up to a maximum of 40 times for any tax outstanding.
For specific industries, the Royal Customs Department has provided special schemes in order to assist the GST issues to be addressed in affected industries:
- Approved Traders Scheme (ATS)
- Approved Toll Manufacturers Scheme (ATMS)
- Approved Jeweller Scheme (AJS)
- Warehouse Scheme (WS)
- Relief for Second-Hand Goods (Second Hand Car Dealers)
- Flat Rate Scheme (FRS)
GST will result in substantial new administrative requirements for day to day business including the need to issue, collect and retain GST tax invoices. Although GST does not commence until 1 April 2015, early planning and follow-up action is needed to implement the required systems and procedures to comply with the GST.
Companies which qualify should look into the following:
- Set up GST Implementation Committee
- Engage GST tax consultant/adviser and ERP systems supplier
- Do project scoping, planning and identifying GST issues
- Determine business changes required, credit terms, term contracts and Budget impacts
- Project Implementation
- Evaluation and User Acceptance Testing
- GST Training, and
- Post Implementation Compliance Review
The size of the task ahead to prepare for GST cannot be underestimated as appropriate planning and follow-up action is essential. Delays in making progress must be avoided, as the commencement date of the GST on 1 April 2015 is immutable.