GST IMPLIMENTATION IN MALAYSIA - Impact to Logistic Industry Zuraini - PowerPoint PPT Presentation

GST IMPLIMENTATION IN MALAYSIA - Impact to Logistic Industry Zuraini binti Othman Unit Penguatkuasaan Pendaftaran GST Bahagian GST Ibu Pejabat JKDM Date : 5 November 2014 1

What is GST? • Also known as Value Added Tax (VAT) • Implemented by 160 countries • Broad based and multistage consumption tax to replace sales tax and service tax • A consumption tax in the form of value added tax • GST incurred on inputs is allowed as a credit to the registrant – offset against output tax • Imposed on goods and services at every stage of the production and distribution chain

What is GST? INPUT OUTPUT Raw materials Consumable goods, GOODS machines etc. or Services (rental, Business SERVICES insurance, etc.) Utilities (electricity and water) GST on inputs GST on outputs output tax - input tax = Output tax = Input tax 4

Malaysian GST model • To replace current tax system 5%, 6%, 10%, 20% & specific rate Rate = 6 % Various threshold Threshold = RM500,000 • GST is charged on goods and services that are  supplied in Malaysia  Imported into Malaysia 5

Malaysian GST model TYPES OF OUTPUT TAX INPUT TAX SUPPLY Standard rated 6% Claimable Zero rated 0% Claimable Exempt No GST charged Not claimable 6

SST vs. GST Sales Tax Service Tax GST Date of 1972 1975 1 April 2015 introduction Imposed on selected Supplies of all goods, Scope of goods at Imposed on selected services charge manufacturing level taxable supplies and Imports and on importation 5 %, 10%, specific rate 6%, specific rate for 0%, 6% Rate for petroleum credit card Exempt supply Acquisition of raw Input Tax credit Facilities materials/component - Various scheme free from sales tax Various threshold up to Threshold RM 100,000.00 RM500,000.00 RM 3 mil 7

GST Treatment For Logistic Industry SERVICES SUPPLIED ZERO RATED Freight transportation i. All International Transportation including courier ii. Local Transportation services which is part of services international journey provided that it is Same supplier Ancillary transportation Services to: services including i. any goods in airport if it is provided by airport loading, unloading and operator cargo handling ii. Imported and exported goods by the same services supplier for the international transport services Storage services Storage services is zero rate to any goods which is carried or to be carried in an aircraft in airport area if it is supplied by the airport operator Leased of container Aircraft Unit Load Devices conforms to International Air Transport Association standard and used or to be used for transportation of goods. 8

COURIER SERVICES SUPPLY SERVICE TAX GST Freight transportation services i. Courier services for packages of i. Taxable i. Taxable less than 30 kg each in Malaysia ii. Other than courier services ii. Non Taxable ii. Taxable Freight transportation services/Courier services by the same supplier from: i. inside Malaysia to out side Malaysia Non Taxable Zero rated supply ii. outside Malaysia to inside Malaysia iii. outside Malaysia to outside Malaysia Courier services by different supplier from: i. inside Malaysia to in side Malaysia i. Taxable i. Standard Rated ii. outside Malaysia to inside Supply Malaysia ii. Non Taxable ii. Zero Rated Supply 9

Supply by Forwarding Agent SUPPLY SERVICE TAX GST Documentation services: i. all customs forms i. Taxable i. Taxable ii. manifest ii. Non taxable ii. Taxable Handling/Forwarding fee Taxable Taxable Attending Customs examination Taxable Taxable Present for customs seal Taxable Taxable EDI customer in Free Zone Non Taxable Taxable Overtime charge for customs Taxable Taxable clearance GST Treatment : Standard rated supply but can be zero rated if supplied by the same supplier who supplied the international freight transportation. 10

Handling Services Loading, unloading, Survey of cargo (including Stevedoring and porterage reloading, stowing, securing damage cargo) and shifting cargo Presenting goods for Preparing and amending Cargo security services customs clearance customs declaration Sorting, opening for inspection, repairing, weighting and Preparing or amending bills tarring, taping and sealing, erasing and remarking, labeling of lading, airway bills and and numbering, tallying, checking, sampling, measuring or certificates of shipment. gouging of goods. 11

FREE COMMERCIAL ZONE • FCZ is treated as a place located in Malaysia • Operators in FCZ are allowed to register under GST • Records are not required to be submitted monthly but must be made available as and when required by Customs • Auditing by Customs will be done at random based on a risk management system 12

GST Treatment – FCZ Place of supply Goods Services Outside Malaysia to Not subject to GST Standard Rated FCZ FCZ to Outside Zero rated Zero rated Malaysia Standard Rated FCZ to PCA Standard Rated (importation) Within FCZ Not subject to GST Standard Rated

Registration for GST Proprietorship Company Local Authority Individual Statutory Body Association Public Authority Partnership Disposal of capital assets Imported services Disregarded supplies (Warehousing Scheme or DA) LIABE TO BE REGISTER NOT LIABLE BUT MAY REGISTER VOLUNTARILY BUT MUST REMAIN FOR AT LEAST 2 YEARS May apply exemption for registration if 100% zero rate 14

Accounting for Tax Charge GST on taxable supplies Issues tax invoice – as Submit return prescribed in the regulations. Account for tax Make Adjustment - Credit note Claim input tax - Debit note - Payment not received > 6 months Time of supply rule 15

DISBURSEMENT  not subject to GST as it is not a supply subject to conditions. You acted for your client when paying the third party. The client actually received and used the goods or services provided by the third party. The client knows that the goods or services would be provided by the third party. The client authorized you to make payment on his DISBURSEMENT behalf. The payment is separately itemized when invoicing the client. You recover only the exact amount which you paid to the third party. The goods and services paid for are clearly additional to the supplies which you make to the client. 16

End End of of Pre Presentatio sentation Tax Review Panel Ministry of Finance 17