Goods and Services Tax (GST) is a multi-stage tax imposed by the Malaysian Government on most of the business transactions that take place in Malaysia. The Goods and Services Tax is collected based on the value added during each stage of the supply distribution chain. Furthermore, imported goods and services are also imposed with Goods and Services Tax.
Who Needs To Register For GST?
As a business owner, it is mandatory for you to register for GST if you are making a taxable supply and if your business turnover is more than RM500000 based on the period of 12 months. Your business turnover is based on business transactions and they include:
- Sales of goods
- Rental of goods and services
- Private use of business assets
- Payment for services provided
- Admission to premises
- Supplies made agents
Business transactions that are imposed by GST are known as taxable supplies. In addition, there are also several goods that are given relief from paying GST by the Minister and this is only subject to certain conditions.
However, if you happen to be in the business with zero-rated supplies, you may be exempted from paying GST. If your business only involves zero rated supplies, you may apply to the Director General of Customs (DG) to get yourself exempted from paying GST. Zero rated supplies are as the following:
- Basic essential items such as rice, fish, meat, chicken, fresh vegetables and cooking oil
- Water made for domestic usage
- First 300kWh of electricity for domestic usage
- Exports of goods
Another supply that is exempted from paying GST is known as exempt supply. The business transaction involving exempt supplies is either standard or zero rated. As exempt supply is not a taxable supply, it is not counted as part of your taxable turnover. If your business only involves exempt supplies, you are then not required to register for GST. Exempt supplies include:
- Residential buildings
- Life insurance
- Private health services
- Private education services
- Financial services
- Land for agricultural use and public use
- Public transportation services such as bus services and ferry services
- Toll charges for highway
The rest of the goods and services that are not included in either zero rate supplies and exempt supplies are subject to a standard GST rate of 6%.
How do I find out If I Must Register for GST?
In order to find out if it is mandatory for you to register for GST, you will need to perform a few tasks. First of all, you will need to calculate your taxable turnover amount based on the total value of your taxable supplies including standard-rated and zero rated for a period of 12 months but you will need to exclude the value of exempt supplies, out of scope supplies, capital assets disposed, imported services such as consultancy and auditing services that you received from overseas and disregarded supplies made under a Warehousing scheme or made between or within Designated Areas.
Out of scope supplies are defined as supplies that do not fall within the charging provision of the Goods and Services Tax act. They include non-business transactions, sale of goods from a country that is out of Malaysia to another country that is out of Malaysia and supplies provided by the Malaysian Government sector. Disregarded supplies are defined as supplies between several companies that are registered under the Group Registration and supplies made between or within warehouses that approved under the Warehousing scheme. Next, you will have to determine your taxable turnover using either the historical method or future method. If your taxable turnover amount does not exceed RM500000, you can still register for GST voluntarily. However, it is important for you to do a cost-benefit analysis based on two years as you need to remain registered for two years after you voluntarily registered for it.
GST also applies regardless if you are an individual or if your business is sole proprietorship, partnership and corporation. Federal Government, State Government, statutory bodies, public or local authority societies, clubs, trade unions, co-operatives, joint ventures, trustees, organizations, associations, group of persons based on corporate or un-incorporated are also required to register for GST.
Likewise, if you are a Malaysian citizen or resident in Malaysia with business is based outside of Malaysia, you may still need to register for GST. Similarly, if you are a resident in another country outside of Malaysia with business in Malaysia, you may have to register for GST.
Benefits of Registering for GST
The benefits of registering for GST as the following:
- By completing your GST returns as scheduled, the process will assist you in keeping your records accurate and up to date.
- In general, most businesses prefer to do business with GST registered individuals and companies
- The GST amount paid can be claimed after the tax invoice is issued and this enables you to make use of it as a working capital over your taxable period and before you need to file your return by due date to pay the GST back to the customs
How to Register?
There are two ways for you to register for GST. The first method is through manually and the second method is through electronically on the GST website. An application has to be made in GST-01 form. Before you submit your GST application, you need to have the following details:
- Your business registration number that was provided by SSM
- Your Identity card number or Mykad number
- Your passport number if you are not a Malaysian citizen
- Registration number that was provided by the Registrar of Society if you are applying as a society
- Your identification number provided by local authorities, professional and statutory bodies
- Your industry code according to the Malaysia Standard Industrial Classifications (MSIC) 2008 code
- Your bank account number for refund purposes
- A copy of your bank statement to be attached together with your application form
- The percentage based on the value of all of your supplies including taxable supplies, local zero rated supplies, export and exempt supplies
- The date when you exceed the threshold
First, download the GST application form from the GST official website and portal. Next, fill in the form only in capital letters using a black colour pen. Once you have completed filling up the form properly, submit the form to GST Processing Center, Royal Malaysian Customs Department, No. 22 Jalan SS 6/3, Kelana Jaya, 47301 Petaling Jaya by post or by hand. Do not staple the form with a stapler or use a paper clip. Lastly, remember to write your company name and full address at the back of the envelope.
Taxpayer Access Point (TAP) is an online portal for taxpayers in Malaysia. Go to the website and click on Register for GST. The website will then provide you step by step instructions on how you can register for GST.
How Do I Know If My Application Has Been Approved?
You will either receive the following details by post or by email:
- Acknowledgement Receipt Number
- Effective date of registration
- First taxable period
- Subsequent taxable period
- Station code
- Station name
- Branch and division number if any
For any further assistance, kindly refer to the official GST website, Customs Call Center, Customs Offices or GST Head Office.