Malaysian Institute of Accountants www.mia.org.

my
welcome to
Concurrent
Session 1D
Goods & Services Tax
(GST) Supply
Time, Place and Value
Aaron Bromley
Bhupinder Singh
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Customs & Indirect Tax
2

Bhupinder Singh
Executive Director, Ernst & Young

Aaron Bromley
Senior Manager, Ernst & Young
GST & SUPPLIES:
TIME, PLACE & VALUE
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GST
OVERVIEW
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Scope of Tax
GST is imposed on:
supply of goods and services in Malaysia
importation of goods into Malaysia GST is charged on importation
importation of services into Malaysia GST is charged by using
reverse charge mechanism (e.g. consultancy, technical services, etc.)
GST
Import of Goods
Physical movement of
Goods into Malaysia
Import of Services
Reverse charge
mechanism
Supply of Goods /
Services in Malaysia
[Belonging Concept / Where
Supplier is Located]
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Scope of Tax
Supply:
all forms of tangible goods or intangible services.
Examples include the sale or disposition, barter, exchange,
license, rental, lease, right to use, entry into obligations.
E.g. Manufacture and sale of goods - - treated as a supply
Delivery of services - - another supply
anything which is not a supply of goods will be treated as a
supply of service.
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Types of Supplies
All supplies fall within 4 categories:
Standard rated Taxable Supplies
Zero rated Taxable Supplies
Exempt No GST (input tax not
recoverable)
Out-of-Scope No GST
Input tax
recoverable

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Types of Supplies
Examples of supply under each category:
Standard rated Local supply of goods / services
Zero rated Export sales / international services
Exempt Certain financial services, healthcare services,
education services, domestic transportation
of passengers for mass public transport, sales /
lease / rental of residential land / property
Out-of-Scope Transfer of business as going concern, sales
of property outside Malaysia, third country sales

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TIME OF SUPPLY
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Time of Supply / Tax Point
As a general rule, GST has to be accounted for at the earliest of the following:

1. Basic tax point

For goods:
at the time of removal, or
at the time the goods are made available to the customer.

For services:
performance of the service.

2. Tax invoice is issued

3. When payment (all or part) is received
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Exception: 14-Day Rule
If the GST invoice is issued within 14 days of the basic tax point and no payment
has been received, then the time of supply is the date of the GST invoice, unless
the taxable person elects not to use this 14-day rule.
20 J un 2007 25 Aug 2007
Goods
Delivered
Normal Rule
20 Jun 2007 1 J ul 2004
Goods
Delivered
Tax Invoice
Issued
When do you pay GST?
14-Day Rule
Payment
Made
When do you pay GST?
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PLACE OF SUPPLY
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Place of Supply
Place of supply is important as GST is charges on supply of goods /
services made in the country (i.e. Malaysia)
Place of supply for:
Goods A supply of goods is treated as made in Malaysia if
the supply originates from a place in Malaysia. The place of
supply is where the goods are removed or made available to
the customers.


Services A supply of services is treated as made in Malaysia
if the supplier has a business establishment or fixed
establishment in Malaysia otherwise if his usual place of
residence is in Malaysia.
Goods manufactured and sold in Malaysia - - Standard Rated
Goods manufactured in Malaysia and exported - - Zero Rated
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GST Considerations:
Drop Shipment
Coy A
(Malaysia)
Customer
(Malaysia)
Coy B
(Japan)
Delivery of
Goods
Invoice @ USD10,000
Invoice @ USD6,000
Should Coy A
(Malaysia) impose
GST on this invoice?
Is Coy B (Japan) required to be
registered for GST in Malaysia?
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GST Considerations:
EPC Contracts Supply and Installation of Goods
Coy A
(Japan)
Customer
(Malaysia)
Coy B
(Malaysia)
Delivery of Goods
and Supply of
Installation
Services
Provide Installation or
Construction Services
Sub-Contract for Installation
or Construction Services
What are the GST issues?
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GST Considerations:
R&D Design Services
Coy A
(Malaysia)
Customer
(Malaysia)
Coy B
(Japan)
Perform R&D
Services for
Goods Located
in Malaysia
Invoice @ USD50,000
Should Coy A impose GST on the
R&D design services performed in
Malaysia but bill to Coy B (Japan)?
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GST Considerations:
Warranty Issues Provide Repair Services
Coy A
(Malaysia)
Customer
(Malaysia)
Coy B
(Japan)
Requires Coy A to provide repair
services to defects in Malaysia
Back-to-Back
Warranty
Back-to-Back
Warranty
Invoice @ USD200,000
Price of goods sold (inclusive of warranty)
Charge GST to Coy B in J apan not recoverable
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VALUE OF SUPPLY
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GST is charged on the value of supply of goods and
services whenever time of supply conditions are met.
Value of supply can be for a consideration in either:
money (GST exclusive value + GST); or
open market value (inclusive of GST).

Value of Supply
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Example: Supply of Goods
2x Widgets @ RM100.00 each RM200.00
Delivery of Widgets RM 20.00
GST Exclusive Value RM220.00
GST @ 5% RM 11.00
VALUE OF SUPPLY RM233.00

Taxable Supply - Value
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Example: Food Co. agrees to provide Stadium Co. with free product
provided it can place advertising boards at the Stadium during
matches.
Supply of Product (RM1050 GST-incl Market Value)



Food Co.: DR1000 (Acquisitions)
DR 50 (Input Tax)
CR1000 (Revenue)
CR 50 (Output Tax)
Taxable Supply Value (Non-Monetary Consideration)
Food Co.
Stadium Co.
Supply of Advertising (RM1050 GST-incl Market Value)
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Importations - Value
Import of motor vehicle:

CIF Value RM100,000
Import Duty @80% RM 80,000
RM180,000
Excise Duty @60% RM108,000
RM288,000
GST @5% RM 14,400
TOTAL RM302,400
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Reverse Charge on Imported Services - Value
Overseas Invoice: AUS$10,000
Malaysian RM @ 2.8 RM28,000
GST @ 5% RM 1,400

DR GST Input Cost 1,400
CR GST Output Cost 1,400

Net GST Position (wholly taxable entity) 0
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Thank you!
If you have any questions, please contact :
Bhupinder Singh
Tel : (6)03 2087 4405
Fax : (6)03 2095 7043
E-mail: bhupinder.singh@my.ey.com