Sales Tax 2018 Services Tax 2018 · 2018-10-31 · Registration tax rate 6% 5%,10% or specific rate 6% or specific rate ... Baby carriages Please refer Sales Tax (Goods Exempted From

Sales Tax 2018

Services Tax 2018

Accounting Treatment and Impact to

Cooperative Business

PRESENTED BY:

TAQIYUDDIN AMINI ABDUL SATAR

PRESIDENT ICMA

Content

• Overview

• Scope

• Accounting for Tax – Sales Tax & Service Tax

• Furnishing SST02 and Payment

• Transitional issues – Preparations & Impacts

Overview : Comparison between GST and SST

Description GST Sales Tax Service Tax

Regulation GST Act 2014 Sales Tax Act 2018 Service Tax Act 2018

Tax system design Multi-tier Single-tier Single-tier

Registration tax rate 6% 5%,10% or specific rate 6% or specific rate

Registration threshold RM500,000 RM500,000 RM500,000 or RM1.5

million (F&B)

Scope of registrants All business making

taxable supplies except

business that make

wholly exempt supplies

All manufacturer & sub

contractors except those

eligible for sales tax

exemption

All service providers

providing prescribed

services

Registrant method MyGST – Tax Access

Point (TAP)

MySST system MySST system

Overview: Comparison between GST and SST

Description GST Sales Tax Service Tax

Accounting basis Accrual basis Accrual basis Payment basis

Scope of tax Taxable goods and

services consumed in

Malaysia & goods and

services imported into

Malaysia

Imported goods into

Malaysia and

manufactured goods in

Malaysia except with

sales tax exemption

Provision of taxable

services made by a

taxable person in

Malaysia.

Service tax is not

charged on imported

services.

Return submission Monthly, quarterly or

other taxable period

approved by DG

Bimonthly ( every 2

month )

Bimonthly (every 2

month)

Due date to submit tax

return & pay tax

1 month from end of

taxable period

1 month from end of

taxable period

1 month from end of

taxable period

Sales Tax 2018An Overview

Sales Tax LegislationAct• Sales Tax Act 2018

Regulations• Sales Tax Regulations 2018• Sales Tax (Customs Ruling) Regulations 2018• Sales Tax (Rules of Valuation) Regulations 2018• Sales Tax (Compounding of Offences) Regulations 2018

Order• Sales Tax (Amount Of Sale Value Of Taxable Goods Manufactured)

Order 2018 • Sales Tax (Rates Of Tax) 2018• Sales Tax (Goods Exempted From Sales Tax) Order 2018• Sales Tax (Person Exempted From Sales Tax) Order 2018• Sales Tax (Exemption From Registration) Order 2018• Sales Tax (Imposition of Tax In Respect Of Designated Areas) Order

2018• Sales Tax (Imposition Of Tax In Respect Of Special Areas) Order 2018 • Sales Tax (Appointment of Date of Coming Into Operation) Order 2018

Examples of Goods

Exempted From Sales TaxLive Animals

• Horses

• Fish

• Sheep and goats

Food items

• Rice

• Beef, mutton and chicken

• Seafood

• Fruits & vegetables

• Sardine

• Cooking oil

• Coffee

• Bread

Machinery

• Vending machine

• Escalator

• Industrial machine

Personal items

• Sanitary towels

• Deodorant

General goods

• Newspaper

• Books

Health

• Medicine

• Vitamin

• Hearing aids

• Pacemaker

Vehicle

• Motorcycle below 250cc

• Bicycle

• Baby carriages

Please refer Sales Tax (Goods Exempted From Sales Tax)

Order 2018 for the gazettes goods

No Sales TaxX

Examples of Taxable Goods

Processed Foods

• Biscuits

• Fruit juice

• Dry noodle

• Processed meat or fish

• Butter and margarine

Food items

• Chocolate

• Ice cream

• Natural honey

Furniture

• Sofa

• Mattress

• Table and chairs

Personal items

• Shampoo

• Toothpaste

• Shower gel

Electrical appliances

• Washing machine

• Television

• Electronic device

• Smart phones

• Computer devices

Tourist favourites

• Watches

• Camera

• Sun glasses

Other

• Engine oil for vehicle

• Brake fluid

• Tobacco products

Please refer Sales Tax (Goods Exempted From Sales Tax)

Order 2018 for the gazettes goods

Petroleum products

• Ron 97 and above

Persons Exempted From

Sales TaxMinister may exempt any person from payment of sales tax charged and levied on any taxable goods manufactured or imported

• Subject to conditions

• Approval on individual basis

Exemption by Sales Tax (Persons Exempted From Sale Tax) Order 2018

• Specific person or to class or category of person

• Specific taxable goods or class of taxable goods

• Subject to conditions specified in the Order

Registered manufacturer is exempted from charging and collecting sales tax due and payable on taxable goods sold to person granted exemption

Failure to comply with the conditions, sales tax becomes due & payable

No Sales TaxX

Sales Tax (Persons Exempted

From Sales Tax) Order 2018

SCHEDULE A SCHEDULE B SCHEDULE C

• Malay Rulers

• Federal & State

Government

• Airline

• Oil & Gas Industries

• Sub contractor

• Manufacturer: with

regards to

‣ goods used for

transportation

‣ repair of goods

• Manufacturer of

specific industries

eg. for

pharmaceuticals

products

• Controlled goods

under Control of

Supplies Act 1961

• Registered

Manufacturer

• Persons

import/purchase on

behalf of the

registered

manufacturer

No Sales TaxX



No. Persons Goods Exempted

1 Any registered manufacturer Raw materials, components and packaging

materials excluding petroleum

2 Any registered manufacturer of

petroleum product

Raw materials, components and packaging

materials including petroleum to be used as raw

materials

3 Any person acting on behalf of

registered manufacturer


materials excluding petroleum

4 Any person acting on behalf of

registered manufacturer of

petroleum product


materials including petroleum to be used as raw

materials

5 Any registered manufacturer Semi-finished taxable goods for finished taxable

goods for subcontract work and subsequently

returned after completion of work

No Sales TaxX



Service Tax 2018An Overview

Service Tax Legislations

Act• Service Tax Act 2018

Regulations• Service Tax Regulations 2018• Service Tax (Customs Ruling) Regulations 2018• Service Tax (Compounding of Offences) Regulations 2018

Order• Service Tax (Amount O f Value o f Taxable Service) Order

2018 • Service Tax (Rate Of Tax) Order 2018• Service Tax (Appointment of Date of Coming Into Operation)

Order 2018

Taxable Services

• Hotel

• Insurance and Takaful

• Service of food and beverage preparation

• Employment agency

• Security

• Management services

• Parking

• Motor vehicle service or repair

• Courier

• Hire and drive car

• Advertising

• Domestic flight except Rural Air Services

• Credit or charge card

• IT services

• Electricity

• Club

• Gaming

• Telecommunication

• Pay-TV

• Forwarding agents

• Legal

• Accounting

• Surveying

• Architectural

• Valuer

• Engineering

Management Services

• Provision of project management services

• Provision of services to manage training programs by third parties

• Secretarial services by the secretary of the company

• Provision of event management services

• Debt collection and receivables management services

• Warehousing management services including comprehensive

supplies recoupment activities, warehousing, maintenance, order,

packaging, delivery and etc.

• Building maintenance services

• Management services for admission of potential students from

overseas to higher education centers in Malaysia

• Provision of outsourced management services by third parties

• Provision of parking management services

• Provision of sports facilities management services

Accounting of Tax –

Sales Tax

Issuance of invoice

• Invoice to be issued pertaining to sale

• Shall contained prescribed particulars

• Bahasa Malaysia or English

• May be produced by computer

• Sales tax payable shall be collected by registered

manufacturer from the purchaser

Content of Invoice

The following particulars are required in the invoice:

• The invoice in serial number;

• The date of the invoice;

• Name, address and identification number of the registered manufacturer;

• The name and address of the person to whom the taxable goods is sold;

• Description and quantity of the goods

• For each description distinguish the type of goods, the quantity of goods or and

amount payable, excluding tax;

• Any discount offered;

• The total amount payable excluding tax, the rate of tax and the total tax

chargeable shown as a separate amount or total amount payable inclusive of

total tax chargeable

• Any amount expressed in a currency other than ringgit shall also be expressed in

ringgit at the selling rate of exchange prevailing in Malaysia at the time of sale.

Credit Note & Debit Note

A credit note is issued under the following situations:

• goods are returned by the purchaser due to wrong

quantity, poor or defective quality or uncontracted goods,

provided that the goods have not been subsequently sold

or disposed of by the purchaser

• discounts given in respect of goods sold and which are

freely available to all who are willing to conduct business

A debit note is issued under the following situations:

• there is an addition of sales tax to be paid for any price

adjustment


A credit note or debit note shall contain the following particulars:

• the words “credit note” or “debit note” in a prominent place

• the serial number & date of issue

• the name, address and ST identification number of the supplier

• the name and address of the customer

• the reason for issuance

• description which identifies the description of goods, the quantity

and amount for which CN or DN is given

• the total amount excluding tax

• the rate and amount of tax

• the number and date of the original tax invoice


If changes relates to amount of tax payable:

• adjustment in the return for the taxable period in which the credit note or debit note is issued

• adjustment in the return for the last taxable for person who has ceased to be a taxable person

If deduction for taxable period exceeds the amount of sales tax payable, the balance is to be carried forward to the next taxable period

Refund is not allowed on balance carried forward if taxable person has ceased to carry on business

Record keeping

• Bahasa Malaysia or English

• 7 years

• can be kept in soft or hard copy

• to be kept in Malaysia

Record keeping

Records relating to registration

• SKM records

Records relating business activities

• invoices, receipts,

• debit note, credit note

• delivery order, purchase order

• Bank slip, bank statement, voucher and etc.

• Contract, agreement

Records relating to accounting (hard copy)

• Financial statement – Profit & Loss, Balance Sheet, Trial Balance

• Account payable, account receivable, General ledger, Sales,

Purchase, stock, cash and etc.

Record keeping

Records relating to taxation

• Customs forms – K1, K2, K9 and etc

• SST returns, registration and etc

• Income tax declaration

Records relating to electronic form

• Accounting software manual

• Accounts chart, access code, program documentation

• Audit trail

• Purchase, Sales, GL Listing (e.g standard, exempt, disregard, out of

• scope, deemed supply etc)

• Management Information Report (MIS) report

• Other data / records keep in accounting / business software

Taxable Period

• Regular interval period where a taxable person accounts

and remits sales tax to the Government.

• The default taxable period for the registered

manufacturer to be bimonthly (2 months) period.

• Registered manufacturer may apply :

• for taxable period other than the default taxable period

Accounting of tax –

Service Tax

Accounting

Issuance of Invoices

• Mandatory for registered person who provides any taxable

services.

• Hard copy or electronically

• Containing prescribed particulars Bahasa Melayu or English

Credit Notes and Debit Notes

• only registered person is allowed to issue and receipt > shall

make an adjustment in his return

• shall contained the prescribed particulars.

Accounting BasisAccounting Basis• Service Tax

✦ Payment basis

• Service Tax required to be accounted:-✦ At the time when the payments is received✦ On the day following period of twelve month when any

whole or part of the payment is not received from the date of the invoice for the taxable service provided.

Taxable Period

• Bimonthly basis (every 2 months)

• Specific basis

Filing frequency Taxable period

First taxable period Sept - Oct 2018

Subsequent taxable period Nov - Dec, Jan - Feb, Mar - Apr, May - Jun, …….

Specific Basis subject to an approval from the DG

Service Tax Facility

Contra System

Registered person is allowed to deduct service tax in

his return for any cancellation and termination of

services or any other reasons such as reducing

premiums or discounts.

Bad Debts

Bad Debts Claim

• Can be claimed by a Registered person or a Ceased to be registered person.

• Can be claim after 6 months to 6 years from the date of service tax was paid

• Subject to conditions & satisfaction of the DG

Bad Debts Recovery

• Has claimed and received the refund

• Payment received from the debtor after bad debts claimed

• Repay to DG in his return

• Repay according to the formula

Furnishing SST-02 Return &

Payment Of TaxWhen to submit sales tax return* (SST-02) & payment of tax

• Normal period - not later than the last day of the month

following after the end of his taxable period

*Return shall be submitted whether or not there is tax to be paid

• Other period as approved by DG - not later than the last

day of the 30 days from the end of the varied taxable

period.

• Failure to submit return is an offence

Payment of tax

Payment for tax due & payable declared in SST-02

Payment of tax by registered manufacturer may be made

• by post to SST Processing Centre

• cheque, bank draft,

• by electronic means

• Internet banking, FPX (financial processing exchange)

Payment of tax

Payment made Penalty Total Penalty

On time or before due

dateNo penalty Nil

1 to 30 days after due

date10% 10%

additional 1 to 30 days 15% 25%

additional 1 to 30 days 15% 40%

more than 90 days after

due dateProsecution 40%

Transitional issues –

Preparations & Impact

Transitional issues from GST to SST

Preparation and critical issues to address

What business should do for GST transition to SST ?

• Look out for latest announcement on GST abolishment and final SST

model.

• Study and assess the impact of the proposed SST

Sales – pricing structure, review contract & sales processes

Purchase – supply chain, costs & review contract

Documentation, operation & administration

Transitional issues form GST to SST

Accounting & software to facilities SST implementation

Compliance of the proposed Sales Tax Act 2018 & Service Tax Act 2018

Legal e.g. Price Control & Anti-Profiteering Act 2011

Price Control & Anti-Profiteering ( Mechanism to determine unreasonably high

profit) regulations 2018 – comes into operations on 6 June 2018.


Preparation and critical issues to address

Question

Do GST registered persons need to account for GST for goods

held in hand before effective date of SST ?

Answer

GST registered persons must account for GST at 0% and declare

output tax in their final GST-03 return.

Question

Goods removed and invoice issued before 1/9/2018. however, the

payment is made on 5/9/2018. what is the tax treatment ?

Answer

GST is charged at standard rate of GST 0% on value of goods

removed.


Question

Full payment received on the removal of goods before 1/9/2018. However,

goods only removed on 3/9/2018. What is the tax treatment ?

Answer

Sales tax of 10% is charged on the value of goods removed.

Questions

Sub-contract work to be performed from 15/8/2018 to 14/9/2018. What is

the tax treatment ?

Answer

GST is charged at standard rate of GST 0% for part of the work performed

until 31/8/2018. the balance of work to be performed from 1/9/2018

onwards shall be charged sales tax of 10%.


Preparation and critical issues address

Question

What is the SST treatment on goods delivered after 1/9/2018 and payment

received or tax invoice was issued during tax holiday i.e. GST at 0% ?

Answer

You must account for sales tax at 10% when issue an invoice to your

customer.

In a case where invoice has been issued, you may issue :

i. Credit note to cancel that invoice and subsequently issue a new invoice

with sales tax at 10% or

ii. A debit note bearing the amount of sales tax at 10%.


Preparation and critical issues address

Question

Hotel accommodation in Langkawi was booked and paid on

8/8/2018 at GST 0%. The hotel stay will be from 3/9/2018 to 9/9/2018.

What is the tax treatment ?

Answer

Based on …….


GST audit and refund • After 1/9/2018, RMCD will carry out GST audit for closure

purpose on GST registered companies.

• GST registrants are allowed to claim input tax within 120 days

after the effective date of SST.

GST refunds : Please give me some time, says Guan Eng

“we understand that some companies have been waiting for up to

two years. Usually, the refund under the GST is an average of one

to two months. But bear with us. Give me the flexibility to clear up

the mess.”

Source : TheSundaily on 4/8/18

Questions & Answer

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Documents

Sales Tax 2018 Services Tax 2018 · 2018-10-31 · Registration tax rate 6% 5%,10% or specific rate 6% or specific rate ... Baby carriages Please refer Sales Tax (Goods Exempted From