1. Preparing Business For The Transition Towards GST ___________________________________________
GST UNIT ROYAL MALAYSIAN CUSTOMS DEPARTMENT 1

2. Briefing Agenda ______________________________________________________ 1. Supplies Spanning GST 2. Non Reviewable Contract 3. Special Refund 4. Government Preparation 5. Business Preparation 2

3. Supplies Spanning GST 3

4. Exception to the general rule
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 4

5. 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
Supply of goods subjects 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 5

6. Non Reviewable Contract6

7. 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 7

8. Change the consideration because of the imposition of GST
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 8

9. Both supplier and recipient are registered persons;
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 9

10. Special Refund 10

11. Claimant is registered person(mandatory registrant)
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 11

12. Capital goods e.g. building and land
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 12

13. 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 13

14. 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 ≥RM10,000 requires audit certificate signed by an approved company auditor 14

15. Special Refund _______________________________________________________
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 15

16. Government Preparation18

17. Getting the tax accepted Getting the people ready
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 19

18. 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

19. Government Preparation ____________________________________________________
Subsidiary legislations:
GST(General) Regulations
GST(Tribunal) Regulations
GST(Advance Ruling) Regulations
GST(Exempt Supplies) Order
GST(Zero Rate Supplies) Order
GST(Rate of Tax) Order
GST(Designated Area) Order
GST(Liability to be Registered) Order
GST(Government Taxable Supplies) Order
GST(Relief) Order
GST(Free Commercial Zone) Order 21

20. Getting the tax accepted Outreach program
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 22

21. Organization structure Manpower Recruitment Training
Government Preparation ____________________________________________________
Getting the people ready
Organization structure
Manpower
Recruitment
Training
Taxpayer service
Call centre: , 03,
GST portal 24

22. 25

23. Getting the system ready
Government Preparation ____________________________________________________
Getting the system ready
1) Core module
Registration
Tax return
Payment
Refund
2) Infrastructure
3) Integration ( Customs, MOF, JPN, SSM and banks)
4) Training 26

24. Business Preparation 27

25. To implement a GST compliant system
GST Implementation Approach ____________________________________________________
To implement a GST compliant system
GST Project Team
1st phase
2nd phase
3rd phase
Develop implementation plan
Implementation and execute
Post implementation
Tax regulatory compliance
Documentation and system
Legal and transitional issues
Education and training
Vendor and supplier communication 28

26. 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 29

27. 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 30

28. 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 31

29. Need to analyze cash flow impact
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

30. Identify whether standard rate, zero rate or exempt supply
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 33

31. 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 34

32. 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) 35

33. Avoid long term contract without legal review
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 36

34. 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 37

35. Wish List _____________________________________________________
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 38

36. 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.”