Preparing Business For The Transition Towards GST
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GST UNITROYAL MALAYSIAN CUSTOMS DEPARTMENT
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Briefing Agenda______________________________________________________
1. Supplies Spanning GST 2. Non Reviewable Contract 3. Special Refund 4. Government Preparation 5. Business Preparation
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Supplies Spanning GST
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Supplies Spanning GST_______________________________________________________________
Meaning of supply spanning GST• Payment or invoice before appointed date(AD) and supply takes place on and
after appointed date e.g. sale of goods, airline tickets.
General Rule• Any supply before appointed date - not subject to GST• Any supply on or after appointed date - subject to GST
Exception to the general rule• Supply of warranty• Provision of services where service tax has been charged• Provision of goods where sales tax has been charged• Non reviewable contracts
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Supplies Spanning GST______________________________________________________
BEFORE GST ON OR AFTER GST
GST IMPLICATION
Goods Supplied(removed/made available)
Invoice issued or payment received
Not subject to GST but subject to SALES TAX
Invoice issued or payment received
Supply of goods subjects to sales tax
Not subject to GST but subject to SALES TAX
Supply of non taxable goods under Sales Tax Act 1972
Value of supply deemed inclusive of GST and account in the 1st taxable period after the appointed date
Goods imported Release from customs control
Subject to GST and date of importation is when goods released from customs control
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Non Reviewable Contract
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Non Reviewable Contract____________________________________________________
Non reviewable contract Written contract with no provision to review consideration for the
supply until a review opportunity arises.
And Contract entered into not less than 2 years before GST
implementation date
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Non Reviewable Contract ____________________________________________________
Meaning of review opportunity Opportunity for supplier either by himself or with agreement
to- Change the consideration because of the imposition
of GST Conduct a review after AD, renegotiation or alteration
of consideration, or Conduct a review before AD, renegotiation or
alteration of the consideration
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Non Reviewable Contract ____________________________________________________
Zero-rated supply for 5 years after appointed date or when a review opportunity arises whichever us the earlier if –
Both supplier and recipient are registered persons;
Supply is a taxable supply; and
The recipient of the supply is making wholly taxable supply
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Special Refund
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Special Refund ____________________________________________________
Entitled to special refund of sales tax if – Claimant is registered person(mandatory registrant)
Holds goods on appointed date for making taxable supply
Goods are subject to sales tax
Holds relevant invoices or import document proving sales tax has been paid
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Special Refund____________________________________________________
Goods not eligible for special refund Capital goods e.g. building and land
Goods used partially or incorporated into other goods e.g. raw materials, work in progress
Goods for hire e.g. cars, generators
Goods not for business e.g. personal use
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Special Refund____________________________________________________
Goods not for sale or exchange e.g. containers, pellets, stationeries, moulds, manufacturing aids
Goods entitled to claim for drawback when exported
Good allowed sales tax deduction under Section 13A Sales Tax Act 1972( credit system) – 8% Tax Credit for Vendors
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Special Refund____________________________________________________
Manner to claim special To claim within 6months from appointed date, 1st April 2015
For special refund < RM 10,000 requires audit certificate signed by a chartered accountant
For special refund requires audit certificate signed by an approved company auditor
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Special Refund_______________________________________________________
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Required to fill a claim form
To be refunded in 8 equal instalments over a period of 2 years
To account as output tax if special refund is claimed and goods subsequently returned to supplier
GovernmentPreparation
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Government Preparation____________________________________________________
Areas requiring attention
Getting the tax right Getting the tax accepted Getting the people ready Getting the systems ready
Requires joint effort of government and business community
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Government Preparation____________________________________________________
Getting the tax right
• Right model To be clear what to tax Zero rate basic food and exported goods and services Exempt public transport, residential property, education,
health, highway toll and financial services
• Legislations and procedures
Clear, simple and ease of administration GST Act, 3 Regulations and 8 Orders GST guides GST rulings 20
Government Preparation____________________________________________________Subsidiary legislations:
1. GST(General) Regulations
2. GST(Tribunal) Regulations
3. GST(Advance Ruling) Regulations
4. GST(Exempt Supplies) Order
5. GST(Zero Rate Supplies) Order
6. GST(Rate of Tax) Order
7. GST(Designated Area) Order
8. GST(Liability to be Registered) Order
9. GST(Government Taxable Supplies) Order
10. GST(Relief) Order
11. GST(Free Commercial Zone) Order
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Government Preparation____________________________________________________
Getting the tax accepted Outreach program
1. Awareness• Consumer• Business• Government
2. Training organized by:• MOF, Customs• Business chambers,
professional bodies, FMM, SME Corp, NGOs, association etc 2
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Government Preparation____________________________________________________
Getting the people ready
• Organization structure• Manpower
Recruitment Training
• Taxpayer service Call centre: 1300-88-8500, 03,7806 7200 GST portal
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http://www.gst.customs.gov.my
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Government Preparation____________________________________________________
Getting the system ready1) Core module
Registration Tax return Payment Refund
2) Infrastructure
3) Integration ( Customs, MOF, JPN, SSM and banks)
4) Training26
Business Preparation
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GST Implementation Approach____________________________________________________
To implement a GST compliant system
GSTProject Team
1st phase
Develop implementation
plan
2nd phase
Implementation and execute
3rd phase
Post implementati
on
Tax regulatory compliance
Documentation and system
Legal and transitiona
l issues
Education and
training
Vendor and supplier
communication
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Business Preparation____________________________________________________
GST Implication on Registration Pre-registration
• Registration exercise begins 6 months before GST implementation date ( 1 October 2014)
• Mandatory registration To register 3 months before GST implementations date (1
January 2015)
Voluntary registration( remain registered not less than 2 years) Compliance costs Vs input tax credit claims Supplier and customer profile
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Business Preparation_____________________________________________________
GST Implication on Prices Identify existing supplier
• Talk to small suppliers to get them registered • Review procurement policy to avoid tax cascading• Negotiate prices with suppliers to pass on saving
Review sales price Price inclusive or exclusive of GST Absorption of GST Price control and anti Profiteering Act 2011
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Business Preparation_____________________________________________________
GST Implication on Stock Management Monitor business stocks
Purchase strikes and lulls Procurement policy Registration and deregistration
Special refund• Physical stock take• Documents to support refund• Audit certificate
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Business Preparation_____________________________________________________
GST Implication on Cash Flow Need to analyze cash flow impact
• Cash recover from customer before GST is due
• Assess the need to provide for one time fund to cater for GST payment upfront
Review credit terms to customers
Review requirement to apply for special schemes(e.g. Approved Trader Scheme) 32
Business Preparation____________________________________________________
GST Implication on Invoicing Identify whether standard rate, zero rate or exempt supply
Issuance of full and simplified tax invoice
Not allowed to issue tax invoice for imported services and second-hand goods under margin scheme
21-day rule
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Business Preparation____________________________________________________
GST Implication on Output Tax Gifts > RM500 subject to GST
Commercial samples in a form not ordinarily available for sale to the public not subject to GST
Deemed supply e.g. private use and disposal of business assets subject to GST
Supplies to connected persons
Business assets held on last day of registration
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Business Preparation_____________________________________________________
GST Implication on Input Tax Input tax credit
• Apportionment of input tax for mixed supplied
Blocked inputs not claimable( e.g. passenger car, entertainment expenses to persons other than employees or existing customers)
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Business Preparation_____________________________________________________
GST Implication on Contracts Avoid long term contract without legal review Zero-rated supply for 5 years for non reviewable contract
GST Implication on Human Resource Upgrade staff understanding of GST Avoid unnecessary mistakes False information may open to audit case
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Business Preparation_________________________________________GST Implication on System Review system and processes
Perform complete mapping of transactions to identify required changes
Online application and submission to tax agency
Computerised system• Ready-made software• Upgrading present system
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Wish List_____________________________________________________
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Both business community and Government are well-
prepared to implement GST
Implementation problems are minimizedl
Minimum impact on prices of goods and services
Public accept GST implementation
Thank you
“PAM does not take responsibility on the accuracy of the above information. The information aforementioned is based on PAM’s
internal research made available from accounting books to the best of PAM’s knowledge only for your easy reference. Members are
encourage to seek further advice from a qualified auditor/accountant.
Members who wish to rely on the above information have been informed of the risks associated with relying on such information.”
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