Business.Com.My - Malaysia Goods And Services Tax (GST) Information
GST Special Rules
Group registration is a facility that allows several companies to group
and centralize their administration for the GST accounting purpose.
Each company must be registered individually before they can be grouped
as a single registered person and each company must be making wholly taxable
Companies are eligible for group registration if one company controls
another company. One company is taken to control another company if the
first mentioned company holds directly, indirectly through subsidiaries or
together directly or indirectly through subsidiaries more than 50% of the
issued share capital of the second mentioned company.
One of the members has to be nominated by the group as the
representative member of the group.
Any taxable supply made by or to a member of the group shall be treated
as a supply by or to the representative member.
Supplies between group members would be disregarded as a supply.
Transfer of business as a going concern (TOGC)
TOGC is a facility provided to both the transferor and transferee
involved in the transfer or sale of business as a going concern.
TOGC may involve the transfer of a whole or part of a business as a
going concern from a taxable person to another taxable person and carry on
the same business.
If only part of the business is transferred, that part of the business
must be able to operate on its own.
When a supply of business assets is made as TOGC, such supply of assets
by a taxable person (transferor) to another taxable person (transferee) is
treated as neither a supply of goods nor a supply of services.
The transferee need not have to pay output tax on the transferred assets
and the transferor does not have to account for output tax on the
Capital goods shall include all goods that can be capitalized under
generally accepted accounting principles as their business asset and used by
a person in the course or furtherance of a business.
If the capital goods are used wholly to make a taxable supply, the
amount of ITC can be claimed in full except on blocked input. However, if
the capital goods are used to make a mixed supply, the amount of ITC has to
be apportioned accordingly based on the percentage value attributable to the
Adjustment to the input tax that has already been claimed should be
repaid if the taxable use decreases over a period. On the other hand, if
taxable use increases, a further amount of input tax can be claimed.
The period of adjustment shall consist of
10 years for land and building
5 years for any capital item other than land and building
Second-Hand Goods Scheme
A special GST treatment to allow businesses to charge and account GST on
the positive price margin from the sales of the second-hand goods.
This scheme which is called "Margin Scheme" to be applied only for goods
(motor vehicle only) purchased from non-registered
person and resold.
By imposing GST on the margin, this scheme avoids the second-hand goods
from being taxed twice (double taxation) as the GST already embedded in the
second-hand goods will be ignored.
This scheme is not applicable for second-hand goods purchased from a
taxable person unless he is participant of Margin Scheme.
Vouchers / Stamps / Tokens
Vouchers, stamps and tokens can be categorized either as monetary
vouchers or non-monetary vouchers.
Monetary vouchers (face-value) are treated as a medium of exchange, and
therefore the supply of monetary vouchers is disregarded as a taxable
supply. However, if the voucher is sold for more than the face value, the
taxable person must account for GST on the excess amount. When the monetary
vouchers are redeemed, the taxable person supplying the goods or service
must account for GST.
The sale or issuance of non-monetary vouchers (non-face value and
include discount vouchers) are regarded as a taxable supply and GST should
be accounted for at the time the vouchers are sold or issued. When
non-monetary vouchers are redeemed they are disregarded as a supply.
If goods and services acquired are given as a benefit to employees, it
is considered as used for business purposes. Therefore, the employer needs
to account for GST on the supply. However the businesses can claim any
relevant input tax incurred. In the case where services are given free to
the employees (e.g. free laundry services) no GST is due because free
service is not regarded as a supply. Value of the fringe benefit given is
based on the open market value.
In the case of fringe benefit where the input tax is blocked or not
claimable, no GST is due when it is given as a fringe benefit to the
Supply made by or to an agent acting on behalf of a principal shall be
deemed to be made by the principal. The principal will have to account for
GST on the supplies, whilst the agent needs to account for GST on his
agent's fees or commission.
Supply made through an agent acting in his own name, the supply shall be
treated as a supply made by the agent himself and need to account for GST on
If an agent acts on behalf of an overseas principal (non-resident), the
supply shall be deemed to be made by the agent. The agent is required to
register an account for GST separately in the name of non-resident.
When goods are imported and supplied by a GST registered agent on behalf
of a non-taxable person, the goods shall be deemed to be imported and
supplied by the agent.
The supply made by a principal to the auctioneer shall be disregarded as
Subsequent supply by the auctioneer shall be treated as a supply made by
the principal and the auctioneer shall be liable to account and pay GST on
Auctioneers' fees or commissions charged to the principal are subject to
GST if he is a taxable person.
Where goods are repossessed from a taxable person and subsequently sold
by the repossessor for the purpose of recovering any debt due, the goods
shall be deemed to be supplied by the taxable person and shall be
disregarded for GST purposes.
The repossessor whether or not is registered should account for the
output tax on the sale of the repossessed goods.
The repossessor is only eligible to claim input tax credit incurred in
the act of repossession (such as storage, transport, advertisement and etc).
Designated Area (DA)
Designated area refers to the free ports of Langkawi, Labuan and Tioman. GST
treatment on the supply of goods and services in the DA:
Supplies within DA and between DA are disregarded for GST purposes.
Goods supplied from DA to Malaysia are subject to GST (treated as
import). However, goods supplied from Malaysia to DA is to be zero rated
except otherwise prescribed by the Minister.
Taxable supply of services from DA to Malaysia or Malaysia to DA is to
be standard rated.
No tax is chargeable on the importation of goods or supply of imported
services into the DA except otherwise prescribed by the Minister.