2014 FCA Business & Tax advisory

GST OVERVIEW & IMPLEMENTATION

BY FCA BUSINESS & TAX ADVISORY
The contents of this seminar have been developed on a general understanding basis and are not intended to suit any particular organisation without further
consulted professional advice. FCA Business & Tax Advisory Sdn Bhd (FCA), including its directors, employees, agents and entity controlled by or owned by or
associated with FCA, accepts no liability or responsibility on whatsoever loss, damage, expense or cost to any party resulting directly and/or indirectly from the
use, application and /or referral of this seminar materials and /or contents and/or the reliance by any party, either in part or in whole.
2014 FCA Business & Tax advisory

Your
Company
GST GENERAL IMPLICATION
Sale of goods to local customer
Standard Rated
Input Output
Commercial Rental
Standard Rated
Advertising expenses
Standard Rated
Import / local purchase of goods
Standard Rated
Medical and personal accident
insurance
Blocked Input Tax
Entertainment
Standard Rated /
Blocked Input Tax
Interest expenses
(e.g. borrowings)
Exempt
Sale of fixed asset (except
on blocked item)
Standard Rated
Service fee
Standard rated
Rental expenses
Standard Rated / Exempt
Free gift (>RM500)
- Standard rated (deemed
supply)
Exportation
Zero Rated
Types of Supply Place of Supply Time of Supply Value of Supply
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

Zero-rated Supplies
Includes:
Exports - goods and services,
i.e. including international
services
Agriculture products - rice and
fresh vegetables
Foodstuff - rice, sugar, table
salt, plain flour, cooking oil
Livestock supplies - live
animals, meat of cattle,
buffaloes, goat, sheep and
swine (fresh or frozen)
Poultry - live and unprocessed
meat of chicken and duck
Egg (fresh and salted) and fish
Supply of the first 300 units of
electricity to domestic users
Supply of treated water to
domestic users
Exempt Supplies
Includes:
Sale and lease of residential
property
Financial services (including
life insurance and family
takaful)
Toll highway
Private health and education
Domestic transportation of
passengers for mass public
transport by rail (KTM, LRT,
ERL, Monorail, ships, boats,
ferries, express bus, state bus,
worker bus, school bus, feeder
bus and taxi)
Land for agricultural purposes
and land for general use
(Government building and
burial ground)
Out-of-Scope Supplies
Includes:
Supplies:
Not made in Malaysia
Not made in the course or
furtherance of a business
Made by a person who is not
registered
Transfer of business as a
going concern
Sales of imported goods within
bonded warehouses (except
last sale)
Supplies and services by
Government, Statutory Bodies
and Local Authorities (except
certain prescribed services)
TYPE OF SUPPLIES
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TYPE OF SUPPLIES
Supplier 1
Price: RM 10
GST: RM 0.60
Tax remitted to Customs
Output tax = RM 0.60
Total amount remitted to
Customs = RM 3.60
End Consumer
Price: RM 50
GST: RM 3.00
Price: RM 60
GST: RM 3.60
Output tax = RM 3.00
Input tax Claim= RM 0.60
RM 2.40
Output tax = RM 3.60
Input tax Claim= RM 3.00
RM 0.60
GST @ 6%
Your Company
Supplier 2
(Standard-Rated Supply)
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TYPE OF SUPPLIES
Taxable Supply
Standard Rated 6%
Zero Rated 0%
Non-Taxable
Supply
Exempt Supply No GST
Out-Of-Scope Not a Supply
How do you ensure
compliance?
Get a GST Certified Consultant to advise proper tagging of
tax code to supply
Using GST Certified Software to tag GST tax code to
supply instead of using manual or non-certified software
Mixed Supply business is advisable to go for Grade A GST
certified software
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

PLACE OF SUPPLY - GOODS
From Location Final Location Place of Supply Subject to GST ?
Malaysia Malaysia Made in Malaysia Local delivery of goods in
Malaysia is subject to GST at 6%
Malaysia Japan Made in Malaysia Export of goods from Malaysia
qualifies for zero-rating
Japan Malaysia (your company is the
importer in custom document)
Made Outside Malaysia
(from the perspective of the
supplier)
Goods imported into Malaysia
subject to GST at 6%
China Japan Made Outside Malaysia Drop-shipment of goods outside
Malaysia is out-of-scope
If the supply is made outside Malaysia, GST will not be charged on the supply
If the supply is into Malaysia, GST is charged at point of importation
From and Final Location Movement of the Goods
e.g.
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

PLACE OF SUPPLY - SERVICES
Treated as in the country where the supplier belongs
Supplier belongs in Malaysia, every supply of services provided within the scope
of GST
Place of Suppliers Belonging
SUPPLIER OF SERVICES BELONGS ?
MALAYSIA OTHER
COUNTRY
Business / Fixed
Establishment
YES NO Supplier belongs in Malaysia
Usual place of residence YES NO Supplier belongs in Malaysia
Business / Fixed
Establishment
YES YES Supplier belongs in Malaysia if the
supply of the business is most
directly concerned with Malaysia
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

PLACE OF SUPPLY
Many more rules and regulation might be implicating the businesses:
Supplies to/from designated areas (e.g. Langkawi, Labuan and Tioman)
Supplies through e-commerce (e.g. goods, digital products and services)
Place of supply of services
Concept of permanent establishment
Importation of services into Malaysia (Reverse Charge Mechanism)
Supplies covering region basis (inside and outside Malaysia)
and others



By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

PLACE OF SUPPLY
How do you ensure
compliance?
Get a GST Certified Consultant to advise tax treatment of
various sale transactions in different scenario
Using GST Certified Software to tag GST tax code to
transactions instead of using manual or non-certified
software to minimize human errors
Provide GST training to accounting staffs to equip with GST
accounting knowledge and skills


By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TIME OF SUPPLY
Important to determine when to account for GST
To account and pay GST output even payment not yet received from customers
The time when a supply of goods or services is treated
being made
General Rule
In most cases, time of supply shall be the earliest of the following:
1. Basic Tax Point
For Goods at the time of removal/delivery
For Services at the time of services performed
2. Tax Invoice is issued
3. Payment is received

By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TIME OF SUPPLY
Goods delivered Tax inv issued Submit GST return &
on 20.12.15 19.01.16 pay GST 31.01.16
31.

Inv issued
> 21 days Pay # later than

Time of supply 30.09.15
& Basic Tax Point Actual Tax Point

Assumptions :
accounting basis = invoice basis
quarterly submission
the quarter taxable period = Oct 15 Dec 15
last day of submission & pyt for the above taxable period = 31.01.16
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TIME OF SUPPLY
Assumptions :
accounting basis = invoice basis
quarterly submission
the quarter taxable period = Oct 15 Dec 15
last day of submission & pyt for the above taxable period = 31.01.16
Goods Delivered Tax inv issued Submit GST return &
on 20.12.15 09.01.16 pay GST 30.04.16
31.

Inv issued
< 21 days Pay # later than

Time of supply & 30.09.15
Basic Tax Point Actual Tax Point

By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TIME OF SUPPLY
Many more rules and regulation might be implicating the businesses:
21 days rule
Continuous supplies spanning over a period
Consignment goods
Coins operated machine
Imported services
Cash flow issues and credit terms
and others



By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

TIME OF SUPPLY
How do you ensure
compliance?
Get a GST Certified Consultant to advise correct time of
supply to account GST and prepare cash flow planning
Using GST Certified Software which helps automate
process on time of supply to account GST in right taxable
period
Provide GST training to accounting staffs to equip with GST
accounting knowledge and skills


By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

VALUE OF SUPPLY
Amount of GST is the value multiplied by the tax rate- 6%
Value on which GST is chargeable
Consideration
106%
Value of Supply
100%
GST Amount
6%
+ =
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

VALUE OF SUPPLY
Many more rules and regulation might be implicating the businesses:
Consideration wholly in money
Consideration partly in money and in kind
Consideration wholly in kind
Supply with no consideration
Supply to connected persons
Value of imported goods/services
and others



By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

VALUE OF SUPPLY
How do you ensure
compliance?
Get a GST Certified Consultant to assess impact of GST
treatment on various transactions
Using GST Certified Software which helps capture correct
amount of GST
Provide GST training to accounting staffs to equip with GST
accounting knowledge and skills


By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST ADMINISTRATION AND REPORTING
Annual Turnover Taxable Period
RM 5m and above Monthly (1 month)
Less than RM 5m Quarterly (3-month)
GST payment and GST return forms are to be submitted:

within 1 month after the end of the Taxable Period.
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST ADMINISTRATION AND REPORTING
GST Audits

GST law operates on a Self-Assessment System.

The Registered Person is responsible for his / her own GST reporting, and must
ensure the correct amount of GST is paid.

Customs officers will conduct GST audits on the Registered Person to verify the
accuracy of the GST return form or GST amount paid.


GST audits can be conducted within 6 years

However, there is NO time limit for cases involving fraud / wilful default.
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST ADMINISTRATION AND REPORTING
Many more rules and regulation might be implicating the businesses:
Bad debt relief/recovered adjustments
Unpaid suppliers invoices adjustments
Blocked input tax
GST Transitional provision
Long term contracts (spanning over 1
st
April 2015)
Record keeping requirements
and others



By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST ADMINISTRATION AND REPORTING
How do you ensure
compliance?
Get a GST Certified Consultant to get GST the FIRST time
Using GST Certified Software which helps automate
process, reduce workload and minimize human errors
Provide GST training to accounting staffs to equip with GST
accounting knowledge and skills


By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST PENALTIES
A fine not less than RM1,500 and not exceeding
RM20,000
Penalty for late
registration
A fine not exceeding RM50,000 or imprisonment not
exceeding 3 years; or BOTH; and
A penalty equal to the undercharged tax
Penalty for incorrect
return
1
st
offence a fine of 10-20 times of amount of tax or
imprisonment not exceeding 5 years; or BOTH
2
nd
offence- a fine of 20-40 times or imprisonment
not exceeding 7 years; or BOTH
Penalties for evasion
of tax
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST IMPACT TO BUSINESS
GST
Business
Efficiency
Sales &
Marketing
Procurement
Finance &
Accounting
Human
Resource
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST IMPACT TO BUSINESS
Businesses may be impacted by the followings :-

a) Business efficiency
less competitive as a result of application of wrong category of supply, ie
standard rated supply instead of zero and out of scope supplies.
additional work flow and paper work

b) Sales & Marketing and Procurement
equip sale staff with well awareness on the vitality of time of supply / tax
point
aware of GST impact on sale transactions/contracts (ie, forward sale)
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST IMPACT TO BUSINESS

c) Finance & accounting
establish a friendly and an effective credit control system in order to alleviate
cash flow

able to identify Blocked Input Tax, claim the correct input tax

ensure timely accounts processing and closing
By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

GST IMPACT TO BUSINESS

d) Human Resources
staff are well trained and prepared

Exercise effective implementation by stages with proper division of responsibility

e) Information technology
use of right and suitable accounting software and/or any IT to automate the
processing/reduce work load
Use of technology to reduce human errors

By Fca business & Tax Advisory
2014 FCA Business & Tax advisory

THANK YOU
Contact :
FCA Business & Tax Advisory SB
www.egst.com.my
enquiry@egst.com.my
fam@egst.com.my
alan@egst.com.my
guomiao.eng@egst.com.my