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Goods and Services Tax

Goods and Services Tax

Goods & Services Tax (GST) in Malaysia

The countdown to GST 1st April 2015 implementation starts now. Malaysia will finally follow many other countries in the world to adopt the Goods and Services Tax (GST) system to replace the existing Sales Tax and Service Tax system. 

What is GST?

GST is a multi-stage consumption tax imposed on goods and services at every level of business transaction.

How does GST work?

GST is charged and collected on all taxable goods and services produced in the country including imports.  GST collected on output tax must be remitted to the government and businesses are allowed to claim input tax credit (GST paid in excess of GST collected).  If there is deficit, the government will refund the excess within 14 to 28 days.

Terms to Remember (Some)

Output Tax - is the GST that a business charges on the taxable goods and services that it supplies in the course of business.

Input Tax – is the GST that a business has incurred on the Purchases of goods and services as part of its operations.

Standard Rated Supplies – Consumers will be charged GST at 6%. A taxable person will charge GST at 6% on the sale of taxable goods and services and pay GST on its purchases. A taxable person can claim input tax credit on its business inputs in making taxable supplies.

Zero Rated Supplies – The final consumer will pay GST at 0%. This means that no tax is charged on consumers on the item. A taxable person will be able to claim a credit for any GST paid on its input.

Exempt Supplies - No tax is charge on the consumer. Unlike zero-rated goods, a taxable person is not entitled to claim input tax credit on purchases.

Time of supply – is the time when a supply of goods and services is treated as being made. It is important to determine the time of supply because a taxable person should charge GST at the time when the supply is made.

Reverse Charge Accounting – A taxable person who receives imported services is required to accounts for output tax and claims input tax.

De Minimis Limit – A taxable person is allow to claim exempt input tax in full if the total value of exempt supply is less than a prescribed amount.

Capital Goods Adjustment (CGA) – A taxable person is to make adjustments to the initial amount of input tax claimed, during a specified period if there is a change in the proportion of taxable use of the capital goods.

What can you do to prepare for GST in Malaysia?

  1. Keep your accounting record up to date
  2. Register your Business on time
  3. Issuing the required Tax Invoices
  4. Filling and Payment of Tax Returns
  5. Input tax credit mechanism and claiming GST refunds
  6. Training your staff from all levels to deal with GST
  7. Learn how to manage your cash flows affected by the GST system
  8. Avoid fines and penalties for no filling, no/late registration, improper record-keeping, incorrect accounting and incorrect submission of GST tax return to Royal Malaysian Customs Department


For our Goods and Services Tax services, please contact our panel of GST Consultant at Bahudn & Associates.

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