Transitional Issues & GST Readiness - CTFA Malaysia · Transitional Issues & GST Readiness GST...
Transcript of Transitional Issues & GST Readiness - CTFA Malaysia · Transitional Issues & GST Readiness GST...
Transitional Issues
& GST Readiness
GST SEMINAR
Date: 19 June 2014
Venue: Hotel Holiday Inn Glenmarie,
Shah Alam, Selangor
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Agenda
Supply Spanning GST
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Acts Repealed
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Non-Reviewable Contract4
Special Refund5
Business Preparation6
Registration
From the appointed date (AD – implementation of GST)
Still enforced on matters where tax is due and payable and liability
(offences) incurred:
Repeal of Sales Tax and Service Tax
Collection
Recovery
Drawback
Remission
Refund
Penalty
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Final return for Sales tax
• Final return must be submitted not later than 28 days from the date
the GST Act comes into force (GST implementation date)
• All tax liabilities must be accounted in the final return
Final return for Services tax
• Return can be submitted in accordance with the Service Tax Act
(payment basis). The licensee may have to submit two returns:
GST return
Special form for service tax until the expiry of 12 months from the GST
implementation date
Repeal of Sales Tax and Service Tax
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When to submit final or last return under Sales Tax / Services Tax?
Return For Last Taxable Period
Feb Mac April
Last date of submission : 28 April
Appointed Date
1 April 2015
Mac April
Last date of submission : 28 April
Appointed Date
1 April 2015
Taxable Period : Feb / Mac
Taxable Period : Mac / April
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What is supply spanning GST?
Payment or invoice before appointed date and supply takes place on
and after appointed date or vice versa e.g. sales of goods, airline
tickets and cinema
General Rule
Any supply before appointed date is not subject to GST
Any supply on or after appointed date is subject to GST
Exception to general rule
Supply of warranty
Provision of goods where sales tax has been charged
Provision of services where service tax has been charged
Non-reviewable contracts
Supplies Spanning GST
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Supplies Spanning GST
AD – 1st. April, 2015
(Appointed Date)
General Rule:
No tax (GST) on:-
a. Supply of goods,
b. Supply of services
c. Importation of goods
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Supplies Spanning GST
AD – 1st. April, 2015
(Appointed Date)
1st. scenario:
Deemed:-
Invoice issued or payment
received on AD
Invoice issued
Payment received
Goods supplied
Services performed
Value of supply
[GST inclusive]
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Supplies Spanning GST
2nd. scenario:
No GST chargeable on the
supply of goods or services
made on or after AD
Licensees under Sales and
Service Tax Act
AD – 1st. April, 2015
(Appointed Date)Invoice issued
Payment received
Goods supplied
Services performed
Licensees is a taxable person
under GST Tax Act
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Registration
Registration effective on or
from the appointed date
AD – 1st. April, 2015
(Appointed Date)
3 months before
Registration
application
Registration during the transitional period:-
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Non-reviewable contract
Written contract with no provision to review consideration
for the supply until a review opportunity arises
AND
24 months before the date of GST implementation (AD)
Non-Reviewable Contract
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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
Non-Reviewable Contract
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Zero rate supply for 5 years (charge GST at 0%) after
appointed date or when a review opportunity arises
whichever is the earlier if:
Both supplier and recipient are registered persons;
Supply is a taxable supply; and
The recipient of the supply is entitled to claim input tax
on that supply
After 5 years period, revert to either standard rate or zero
rate
Non-Reviewable Contract
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AD – 1 st. April, 2015
(Appointed Date) 5 years after AD
Review
Opportunity
Non-Reviewable Contract
Review
Opportunity
Zero rate supply for 5 years after appointed date or
when a review opportunity arises whichever is the
earlier
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Entitled for special refund of Sales tax if
claimant is registered (mandatory) person
hold goods on appointed date for making taxable supply
goods are subject to sales tax and sales tax has been paid
holds relevant invoices or import document to show sales
tax has been paid
Special Refund
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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
goods not for sale or exchange e.g. containers, pellets, stationeries,
moulds, manufacturing aids
goods entitled to drawback
goods allowed sales tax deduction under Section 31A STA 1972
(credit system)
Special Refund
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Manner to claim special refund
claim within 6 months from appointed date
for special refund < RM10,000 require audit certificate signed by a
chartered accountant
for special refund ≥ RM10,000 require audit certificate signed by
an approved company auditor
use special form to claim refund (online only)
to be given in eight (8) equal installments over a period of two (2)
years
to account as output tax if special refund is claimed and goods are
returned
Special Refund
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Reduce special refund to 20%
(20% method)
purchase goods from non licensed manufacturers
goods are subject to sales tax
holds invoices which does not show sales tax has been
charged
claimant is a registered (mandatory) person
hold goods on appointed date for making taxable goods
Special Refund
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20% method
reduce the actual purchase price by 80% for goods held on
hand on appointed date
Special refund = actual price x 20% x sales tax rate
Example:
Purchased RM15,000 of raw materials but holds RM10,000 on
appointed date
Special refund = RM10,000 x 20% x 10%
= RM200
Special Refund
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BUSINESS PREPARATION FOR GST
GST
Readiness
Human
Resource
Sales &
Marketing
System
& Processes
Accounting
& Finance
Purchasing
& supply chain
Government
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ESTABLISHING GST COMMITTEE
To implement a GST compliant system
GST
Project
Team
Initiate
impact
study
Pre GST and
dry run
1st phase 2nd phase 3rd phase
Make changes to
system processes
and staff training
Key areas requiring attention
Tax
regulatory
compliance
Documentation
and system
Legal and
transitional
issues
Education
and training
Vendor and
supplier
communication
Apr 2014 -- June 2014
(3 months)
July 2014 -- Jan 2015
(7 months)
Feb 2015 -- Mar 2015
(2 months)
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GST Implication on System
review system and processes
perform complete mapping of transactions to
identify required changes
GST liability on every transaction and deadlines
use of online submissions to tax agency
computerised system
ready made software
upgrading present system
BUSINESS PREPARATION FOR GST
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GST Implication on the Repeal of Sales Tax and Service
Tax
Chargeability
Facilities under the taxes repealed
Taxable goods and services
Non taxable goods and services
Invoices issued and payment received before implementation date
Invoices issued or payment received after implementation date
Obligation to submit return and pay tax
Invoice issued deemed inclusive of GST
BUSINESS PREPARATION FOR GST
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GST Implication on Registration
can choose to be in the GST system
are required to be in the GST system
pre-registration
registration exercise begins June 2014
mandatory registration
to register 3 months before date of GST implementation
voluntary registration
input tax consideration
consumer profile
BUSINESS PREPARATION FOR GST
Areas GST Implications
Pricing
Policies
Change in selling price to reflect GST replacing
SST
Negotiate with suppliers/vendors on prices of raw
materials/trading stocks
Input tax claimable
Review procurement policy to avoid cascading
effect
To assess customers reaction on price
Price Control and Anti Profiteering Act 2011 will
come in force
Stock
Management Monitor business stocks (e.g. raw materials)
- Special refund
conduct stock take
- Deregistration
BUSINESS PREPARATION FOR GST
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Areas GST Implications
Cash Flow Need to analyze cash flow impact
to assess the need to create a one time
fund to cater for GST payment up-front
cash maybe recovered from customer
before GST is due
Credit Terms Need to review credit terms and issuance of
invoice
timing differences may impact cash flow of
business
may result making payments of GST before
collection from customers
BUSINESS PREPARATION FOR GST
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Areas GST Implications
Bad debts Ensure a proper matching of payment of tax to
government and payment received from
customers
Ensure GST compliance by reviewing the
accounting / recording system
Bad debt claims evidence of ‘reasonable efforts’
to recover the debt
Advertising Requirement to show price as GST inclusive
BUSINESS PREPARATION FOR GST
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Areas GST Implications
Invoicing Identify type of each supply - Standard Rate,
Zero Rate, Exempt or Out of scope
Pricing– GST inclusive / exclusive
Simplified Tax invoice
Full tax invoice necessary
Accounting system – able to capture and keep
track GST in financial year
Systems /
software
On line submission to Customs Department
Enhance existing system
BUSINESS PREPARATION FOR GST
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Areas GST Implications
Staff Training To upgrade understanding of GST
To avoid unnecessary mistake
False/wrong information declared may
open for audit case
Monitor business stocks (e.g. raw
materials)
- Special refund
- conduct stock take
Computerised accounting system
Contract Legal advice with regards to contract
Avoid long term contract without legal
review
BUSINESS PREPARATION FOR GST
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There are no major compliance problems. Taxpayers have generally
been compliant and most of the errors uncovered stem from a lack of
awareness of GST obligations or an inadequate understanding of GST
rules.
Wish List:
1. Both business community and Government are well -prepared to
implement GST
2. Implementation problems are minimized
3. Minimum impact on prices of goods and services
4. Public accept GST implementation
General Comment from countries implemented GST /
VAT on compliance:
BUSINESS PREPARATION FOR GST
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Ketua Setiausaha,
Perbendaharaan Malaysia
Pejabat Pelaksanaan GST
Komplek Kementerian Kewangan,
No.5, Persiaran Perdana,
Pusat Pentadbiran Kerajaan Persekutuan Malaysia,
62596 PUTRAJAYA.
Tel : 03-88823000
GST PORTAL
www.gst.customs.gov.my
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Customs Call Centre (CCC)Tel: 03- 78067200
Fax: 03- 78067599
Email: [email protected]
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INQUIRY