GST Tax Agent licensed by Ministry of Finance

MALAYSIA SST

Sales Tax Act was first introduced in Malaysia in the Year 1972 and Service Tax Act was in the Year 1975. While GST Act was implemented on 1 April 2015 to replace both Sales & Service Tax Act. After a little over 3 years, Malaysia is in the progress of changing to the new Sales & Service mechanism on 1 September 2018.

Let’s have a glance on the old SST while we are waiting for the official release of the new Act. Sales Tax applied to both manufacturers and importers. It levied on all taxable goods (except for those that with exemption granted) manufactured and sold in domestic market or for goods imported in Malaysia. While a general rate of 10% applies, some category of goods have a different rate and amount. continue reading ...

Service tax was a single level tax and applied to prescribed taxable services provided by prescribed taxable persons. The general rate is at 6% and the list of prescribed services was listed in the Second Schedule to the Service Tax Regulations 1975. There are exceptional case whereby a specific amount was charged on the annual fee for credit cards. Service tax of RM 50 was charges to principal card and RM 25 to supplementary card.

Both Sales & Service Tax Act were single-stage taxes, there were no input tax credit as what we used to do in GST. Therefore, the taxes paid could be a cost to businesses. Royal Malaysian Customs Department (RMCD) do give Sales Tax exemption on application basis. Exemptions were given on limited inputs, for the raw materials used directly to manufacture taxable goods. Other than the mentioned exemption, there are facilities such as refunds and drawbacks which provide relief under specific circumstances which includes exports.

The time framework for the implementation of new SST might be challenging. Businesses have to work out a plan that able to cater the smooth transition from GST to SST. There are a few important issues that are we would like to highlight here for your early preparation while waiting for official announcement. Plan a total approach for the transition with your professional team within the stipulated time frame. Plan the GST abolishment by updating and finalise the GST liabilities and claims. Do allocate resources to check and verify the past submission and records, not to forget the on going liability whereby the authority has the responsibility to ensure GST compliance in 7 years to come after the abolishment.

On the new SST implementation arrangement, put a framework in place that starts from determining whether your products and services fall within the scope. Follow by understand the mechanism, pricing strategy, compliance, taxable period, submission and cash flow management. While working on the compliance, do note the possible change to documentation and processes. And the concern of most at this time is whether the company system and software able to adopt the new SST, so do communicate and plan with your IT team either in house or outsourced on the possible scenario and the support needed after the official announcement is released.

GST Tax Code

The use of Recommended GST tax code to accounting entries are always the challenges and concern to businesses. It is not compulsory to use the Tax Codes recommended provided by Royal Malaysian Customs Department (RMCD) but you always encourage to do so in order to have good compliance.

We would like to introduce the updated recommended tax codes for your reference. The tax codes listed are recommendations to allow proper classifications of typical purchase and sales scenarios encountered by GST-registered businesses for the purpose of better compliance. The list is not intended to be prescriptive nor comprehensive.

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You may download the "Explanation on the Recommended GST Tax Code" here

GST Audit

With the recent updates, we know that the Royal Malaysian Customs Department (RMCD) is target to collect RM 3 billion in GST through its Customs Blue Ocean Strategy 3.0. The Department aims to inspect about 200,000 of the 433,000 GST-registered companies in the CBOS 3.0 operation in the Year 2017.

Managing GST audit risk is essential to ensure smooth business operation and reduce the unnecessarily penalties to businesses. Hence, we strongly advise businesses to identify the common errors that you might not aware of by downloading the "GST Audit & Common Error Guide" and do a self check now.

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Important Info

GOODS AND SERVICES TAX ACT 2014

GOODS AND SERVICES TAX (ZERO RATED SUPPLIES) ORDER 2014

GOODS AND SERVICES TAX (EXEMPT SUPPLIES) ORDER 2014

GOODS AND SERVICES TAX (RELIEF) ORDER 2014

GOODS AND SERVICES TAX (IMPOSITION OF TAX FOR SUPPLIES IN RESPECT OF DESIGNATED AREAS) ORDER 2014