What GST is all about, its fundamentals and its practical execution

1. GST: WHAT TO WATCH OUT FOR LEGALLY
Chris Tan Chur Pim
Managing Partner
®
advocates & solicitors ||| registered trade mark agent

2. LAW
vs
POLICY
vs
MINISTER’S SPEECH

3. HOW TO READ THE LAW
• Perception or Experience
• Mindset – Singapore Finelah or Malaysia Boleh?
• Interpretation – Conservative or Liberal (within
the box)?
• Risk Profile – Survival (within the box) or
Opportunist (outside the box)?

4. WHAT IS BUDGET?

7. GST EXEMPTIONS
• Zero-rated supply: Basic food items;
Vege, fish, meat, poultry, eggs, etc
• Exempt supply: Education services, public transport,
financial services, etc
• Relief
• Out of scope
supply
• Shopper’s Guide
(1 Jan 2015)

8. GST Compliance:
WHO SHALL REGISTER?
• Compulsory: annual sales turnover exceeding
RM500,000
• Voluntary: turnover below RM500,000
• When to Register: 1 June 2014 – 31 December 2014
• Penalty for failing to register: Customs have
threatened use of Section 96, GST Act.
• fine of up to RM30,000.00 and/or 2 years prison.

9. FILE YOUR GST
RETURNS
• All taxable persons must
account for tax in a GST
return
• Use GST-03 form

10. WHEN TO SUBMIT GST RETURNS
• Not later than the last day of the month after end of
the taxable period.
OR
• If your taxable period does not finish on the last day of
the month; not later than the last day of the 30 day
period from the end of the taxable period.

11. TAXABLE PERIOD?
• A period where a
taxable person must
account for and pay
GST.
• Can apply to the
Customs to be placed in
a different category.
Category Annual
Sales
Taxable
Period
A RM 5
Million
and more
1 month
B Less
than RM
5 Million
3 months

12. DEVIL IS IN THE DETAILS…

13. Penalty for incorrect return
Section 88 of GST Act 2014:
 Person convicted under s.88 liable to:
a) Fine not more than RM50,000.00 and/or
imprisonment for a term not more than 3 years;
and
b) Penalty equal to the amount of tax which has
been/would have been undercharged if the
information had been accepted as correct.

14. MYTHBUSTER
vs

15. MYTHBUSTER
Can everyone collect GST?

16. GST Challenges: Interpretation
LESSONS FROM UK
• July 2008
– UK High Court: a famous brand of potato chips
is not a “crisp” because it is only 42% potato
(standard rated)
– Rest made from dough, making them more like
a cake or biscuit (zero rated)
• The producer of the chips saves millions of
pounds

17. • May 2009
– Court of Appeal rules in favour of HM Customs.
– Chips are a potato snack, liable for VAT(GST).
– Judge:
“There is more than enough potato content for it
to be a reasonable view that it is made from
potato”.

18. CHALLENGE FOR MALAYSIA?
• Raw chicken: ZERO-rated
• Marinated chicken: Standard rated
(Value Added!)
• Will traders manipulate the system?

19. GST/VAT FRAUD
“Carousel” Fraud
 Criminal gangs trade goods, such as mobile
phones, across EU countries.
Imports from the EU are exempt from VAT.
Fraud happens when the criminals sell the goods
with VAT in the UK but do not pass the VAT to HM
Customs.

20. CHALLENGES FOR MALAYSIA?
Generally, GST is also charged on goods imported
into Malaysia, except:-
• Imported goods subject to the ‘GST Relief Order’
– (e.g: medical equipment, multimedia equipment for
teaching, etc)
– Relief Order: Orders on GST gazetted items, released
by the MOF.
Possible challenge:
Businesses charging GST on imported goods even
though the goods are gazetted for relief.

21. Greedy Grandma
• Allison Hawksworth , 61, claimed £286,649 (RM 1.5
mil) of VAT (GST) on a fake children’s clothing
company.
• Lied about having ovarian and liver cancer,
pretended to be her own daughter, Julia, telling
inspectors her ‘mother’ had a major stroke and was
in a nursing home.
• Sentenced to 12 months in prison.

22. Losses of UK Government
• In 2004/05, £1.1bn and £1.9bn (RM5.8bn and
RM10bn) tax revenue was lost due to carousel
fraud;
• In 2006, loss was estimated between £13bn
and £18bn (RM68bn and RM94bn).

23. CHALLENGES FOR MALAYSIA?
• Merchants who claim to be GST registered,
charge GST, but are not registered.
• Possible solution: Check the registered GST
number of your supplier with the RMCD.

24. GST INCENTIVES
 Training grant RM100m for employees attend GST
courses;
 Financial assistance RM150m to SMEs to purchase
accounting software;
 Accelerated Capital Allowance on purchase of ICT
equipment and software;
 Expenses incurred for training in accounting and ICT
relating to GST will be given additional tax deduction.

26. HOW TO APPLY FOR E-VOUCHER
• Register for GST at www.gst.customs.gov.my
• Register for the e-voucher at
www.gst.evoucher.smecorp.gov.my
(deadline: 31 December 2014!!!)
• Value/valid: RM 1,000 and valid 1 June 2014-
28 February 2015

27. INCOME TAX REDUCTION

28. YA 2015 (Individual)
 Individual income tax rate reduced by 1-3%
 300,000 individual taxpayers no longer pay income tax
 No tax liability on tax payer with family and income of
RM4,000 per month
 Chargeable income maximum rate increased from
exceeding RM100k to RM400k
 Current maximum tax rate (26%) to be reduced to 24%,
24.5% and 25%

29. YA 2016 (Corporate)
 Income tax rate reduced by 1% (25% -> 24%)
YA 2016 (SME)
 Income tax rate reduced by 1% (20% -> 19%)

30. christan@churassociates.com

31. www.facebook.com/churassociates

32. www.facebook.com/christan.my

33. COMING SOON…
The Most Wanted
Series: GST