gst frequently asked questions (faqs) section a : · pdf filegst frequently asked questions...

GST Frequently Asked Questions (FAQs)

FAQs for GST-Version 4.0 January 2015

Section A : General Information on GST

1. What is a GST?

A Goods and Services Tax (GST) is a consumption tax based on the value-added

concept. GST is charged on any taxable supply of goods and services made in the

course or furtherance of any business by a taxable person in Malaysia. GST is also

charged and levied on the importation of goods and services into Malaysia.

2. What is the rate of GST that will be imposed?

6%

3. Are all goods and services subject to GST?

Not all goods and services will be subjected to GST. Certain basic food and

amenities are free from tax, i.e. zero rated. In addition, certain supply of goods and

services such as financial services and healthcare services are determined by the

Government as exempt supply. For more information, please refer to the following:

i) Goods and Services Tax (Zero-rated Supply) Order 2014

http://gst.customs.gov.my/en/rg/SiteAssets/gst_order/pua_20141013_P.U.%2

0(A)%20272%20-

%20Perintah%20CBP%20(Pembekalan%20Berkadar%20Sifar)%202014.pdf

ii) Goods and Services Tax (Exempt Supply) Order 2014

http://gst.customs.gov.my/en/rg/SiteAssets/gst_order/pua_20141013_P.U.%2

0(A)%20271-

perintah%20cukai%20barang%20dan%20perkhidmatan%20(pembekalan%2

0dikecualikan)%202014.pdf

4. Do all businesses need to be registered under GST?

Any person who makes a taxable supply for business purposes and the taxable

turnover of that supply for a period of 12 months or less exceeds the threshold of

RM500,000 is required to be registered for GST. However, business with taxable

turnover of RM500,000 and below may choose to apply for voluntary registration.

For further enquiries, kindly refer to this official GST website :

http://gst.customs.gov.my/en/cu/Pages/cu_ccc.aspx

http://gst.customs.gov.my/en/rg/SiteAssets/gst_order/pua_20141013_P.U.%20(A)%20272%20-%20Perintah%20CBP%20(Pembekalan%20Berkadar%20Sifar)%202014.pdf



http://gst.customs.gov.my/en/rg/SiteAssets/gst_order/pua_20141013_P.U.%20(A)%20271-perintah%20cukai%20barang%20dan%20perkhidmatan%20(pembekalan%20dikecualikan)%202014.pdf




http://gst.customs.gov.my/en/cu/Pages/cu_ccc.aspx



5. How does GST work?

In Malaysia, a person who is registered under the Goods and Services Tax Act 2014

is known as a “registered person”. A registered person is required to charge GST

(output tax) on his taxable supply of goods and services made to his customers. He

is allowed to claim input tax credit on any GST incurred (input tax) on his purchases

which are inputs to his business. Thus, this mechanism would avoid double taxation

and only the value added at each stage is taxed.

6. Where can I obtain more information about the GST mechanism in Malaysia?

Please refer to the official website of the Royal Malaysian Customs Department

(RMCD) at http://gst.customs.gov.my/ for more GST-related information, legislation

and guidelines.

http://gst.customs.gov.my/



Section B : GST information about Bursa Malaysia (‘Bursa’)

1. Is Bursa a GST registered person?

Yes, Bursa and its subsidiaries are registered as prescribed under the GST with

requirements of RMCD. The following are the respective registration numbers:

No. Name of Company Registration Number

1 Bursa Malaysia Berhad 001799364608

2 Bursa Malaysia Securities Berhad 000830267392

3 Bursa Malaysia Securities Clearing Sdn Bhd 002002501632

4 Bursa Malaysia Derivatives Berhad 001064173568

5 Bursa Malaysia Derivatives Clearing Berhad 001446649856

6 Bursa Malaysia Depository Sdn Bhd 001730162688

7 Bursa Malaysia Information Sdn Bhd 001159364608

8 Bursa Malaysia Islamic Services Sdn Bhd 001165811712

2. What are the GST treatments of fees charged by the Bursa Group?

With effect from 1 April 2015, Bursa will charge GST at the standard rate of 6%

(where applicable), as governed by the GST Act 2014. The schedule of fees

charged by the Bursa Group includes, but not limited to, the following:

Bursa Group Type of fees

Securities Market (All fees are standard rated, that is 6%)

Trading fee

Clearing fee

ISS fee

Buy-in commission

Admin Fee - Failed Securities Contract

Fees for Securities Borrowing & Lending

Listing fee

Depository services fee

Information service *

Participants fee

Access fee

Central Matching Facility fee

Fees relating to Clearing Guarantee Funds




Derivatives Market (All fees are standard rated, that is 6%)

Trading fee

Clearing fees

Clearing House Services fees

Membership fees

Information services & Market Data*

Islamic Market – Bursa Suq Al-Sila' (BSAS) (All fees are standard rated, that is 6%)

Trading fee

Access fee

Administrative fee

Islamic Market – Sukuk & Bonds (All fees are standard rated, that is 6%)

Listing fee

Islamic Market – Exchange Traded Sukuk & Bonds (ETBs) (All fees are standard rated, that is 6%)

Trading fee

Clearing fee

Listing fee

Public Issue Fee

Labuan International Financial Exchange (LFX) (All fees are Out of Scope, not subjected to GST)

Application fee

Renewal fee

Listing fee

Regulations (All fees are standard rated, that is 6% except for transfer fees & fines which are Out of Scope, not subjected to GST)

Perusal fee

Processing fee

Access fee to Bursa Link

Technology Systems (All fees are standard rated, that is 6%)

Installation fee

Network equipment rental

Access fee

Co-location*




Others (All fees are standard rated, that is 6%)

Rental

Knowledge Centre - Membership fees, service fee, sale of publication and corporate souvenirs

Tender fee

Events – Sponsorship income, participant fee and registration fee

CBRS III – Research coverage services

*Note: If charged to a non-Malaysian, it may qualify for zero rated (subject to conditions prescribed in the GST legislation).

3. Is the buying and selling of shares subjected to GST?

The buying or selling of shares is an exempt supply as set out in the Second Schedule of the Goods and Services Tax (Exempt Supply) Order 2014 i.e. when a share is bought or sold there will be no GST on the gross contract amount, which is price x quantity of the securities. However, the supply of services relating to the buying and selling of shares such as clearing and settlement, brokerage etc. for which fees or commission are charged, will be subject to GST at the standard rate of 6%.

4. Are the fines imposed under the Rules of Bursa subjected to GST?

No, fines imposed under the Listing Requirements and all Business Rules of Bursa

Group of Companies are not within the scope of GST, as such, not subjected to

GST.

5. Is late payment interest subjected to GST?

No, late payment is not within the scope of GST, as such, not subjected to GST.

6. What is the treatment of interest income given back to the brokers?

Interest income is exempt for the purposes of GST.



7. Will Bursa Malaysia issue tax invoices?

Yes, as Bursa Group of Companies has registered with the RMCD, Bursa will issue tax invoices for its taxable supply of goods and services.

8. If I am a non-Malaysian trading Bursa’s products, will I be charged GST on the services rendered in Malaysia?

Yes, as a non-Malaysian trading on Bursa’s products, you will be charged GST at

the standard rate of 6%.

9. If my membership tenure in Bursa’s Knowledge Centre overlaps 1 April 2015,

is the said membership fee subjected to GST?

GST will take effect from 1 April 2015. As such, the proportion of membership fee

after 1 April 2015 is subject to GST. However, your payment made before the implementation of GST is deemed inclusive of GST.

10. Are transfer fees imposed on Participating Organisations (“POs”) for the

recruitment of experienced dealers representatives from another PO subjected to GST? No, the above transfer fees are out of the scope of GST.

11. I am a non-Malaysian client subscribing to Bursa's Technical Infrastructure

Services (TISA - rental model) and Bursa's co-location services, why is the co-location service fee qualified for zero-rated but the TISA fee is subject to GST at standard rated?

To qualify for zero-rated treatment, the relevant services must be prescribed in the

GST (Zero-rated Supply) Order 2014 (“the Order”). As the co-location services relate

to the provision of a physical environment for the operation of the computer server

equipment in Malaysia of a computer server equipment belonging to a non-

Malaysian (as per clause 19, Second Schedule of the Order), the fees are qualified

for zero-rated treatment. However, TISA is not prescribed in the Order, as such,

GST at standard rated will be applied.



12. What is the contractual relationship between the clearing participant and the

Clearing House?

Section 51 of the Capital Markets And Services Act 2007 (“CMSA”) states that where a participant in his capacity as such enters into any transaction with an approved clearing house, the participant shall be deemed to be a party to that transaction as principal.

13. Why is collateral management fee subjected to GST?

GST will be applicable where there are services rendered. The collateral

management fee is for services performed by the Clearing House for managing the

brokers’ collateral funds and hence will be subject to GST.



Section C : GST Information Specific to the Derivatives Market

1. What are the fees that are subjected to GST in the derivatives market?

The fees and charges below are subjected to GST.

A. Trading

B. Clearing

C. Clearing House Services Fee



D. Membership Fees – Trading Participant / Clearing Participant/ Associate

Participant & Registered Representatives

E. Information Services & Market Data

Fees charged to foreign customers are zero-rated if they meet the conditions in

the GST (zero-rated supply) Order 2014

Type GST Treatment Domestic Traders

GST Treatment Foreign Traders

Fixed Fees

Derivatives – Real Time Standard Rated Zero-rated

Derivatives - Delayed Standard Rated Zero-rated

Derivatives - EOD Standard Rated Zero-rated

Non-display Data Usage Standard Rated Zero-rated

Service Facilitators Standard Rated Zero-rated

Variable Fee

Derivatives – Real Time Terminal Standard Rated Zero-rated



2. Are any of the fees zero rated?

Market data provided to non-Malaysian customers (See Note)

Bursa’s co-location services to non-Malaysian customers (See Note)

Note - It is not subject to GST if the non-Malaysian customers meet the conditions in

the GST (zero-rated supply) Order 2014. [Also refer to Section B Question 2]

3. Are non-Malaysians trading in Bursa’s products subjected to GST?

Based on the GST (Zero rated supply) Order 2014, services rendered to non-

Malaysians in relation to Bursa’s products are subject to GST. [Also refer to Section

B Question 5]

4. Please explain the GST invoicing and collections process.

Bursa will be implementing the invoicing and collection of GST in two phases:

A. Phase 1

Takes effect on 1 April, 2015

GST will be processed by Bursa Finance Department

Collection and invoicing will be managed by Bursa Finance on a

monthly basis save for tender value on physical delivery

B. Phase 2

Tentatively 3rd quarter 2015

GST will be processed in the Derivatives Clearing & Settlement

System (“DCS”)

GST invoice will be made available in the DCS for viewing, printing

and archiving

Collection and invoicing will be managed by Bursa Malaysia

Derivatives Clearing (“BMDC”)

Daily eFIX files for GST will be made available



5. Please explain the payment process on GST during phase 1?

A. Trading fees, Clearing fees and Clearing House Service Fees

GST will be invoiced on the first day of the following month, on a monthly

basis with a credit term of T+7 (before 6.30pm)

For trading fee, GST to be paid into Bursa Malaysia Derivatives (“BMD”)’s

operations account

For clearing fee and clearing house services fee, GST to be paid into

BMDC’s operations account

B. Tender value

For physically delivered commodities, given its large value, it will be

invoiced as and when the delivery takes place. The Buying Clearing

Participant must self compute and pay for the GST portion on tender

amount for each physically settled contract, before delivery can take place

GST to be paid into BMDC’s settlement account with respective

settlement banks and GST amount must be separated from settlement /

tender amount

The timing is as follows:

Process Timeline

1 Selling Clearing Participant to issue invoice to BMDC

T + 1 by 4.00 pm

2 Buying Clearing Participant to pay GST T + 2 by 8.45 am

3 Bursa Finance to issue invoice to Buying Clearing Participant

T + 2 by 4.00 pm

4 Clearing House to pay GST to Selling Clearing participant

T + 2 by 4.00 pm

C. For all other fees (e.g. market data), a tax invoice will be issued by Bursa

Finance and the GST inclusive amount must be settled within the due date stated

in the tax invoice



6. Please explain the payment process for GST for Phase 2.

A. Trading fees, Clearing fees and Clearing House Service Fees

GST to be paid into BMDC’s settlement account with the respective

settlement banks and GST amount will co-mingle with the settlement /

tender amount


Process Timeline

Invoice available in DCS system T + 1 after 7.00 am

Clearing Participant to pay GST T + 1 by 8.45 am

B. Tender amount

GST to be paid into BMDC’s settlement account with the respective

settlement banks and GST amount will co-mingle with the settlement /

tender amount


Process Timeline

1 Selling Clearing Participant to issue invoice to BMDC

T + 1 by 4.00 pm

2 Invoice available to the Buying Clearing Participant in the DCS system

T + 1 after 7.00 am

3 Buying Clearing Participant to pay GST T + 2 by 8.45 am

C. For all other fees (e.g. market data), a tax invoice will be issued by Bursa

Finance and the GST inclusive amount must be settled within the due date stated

in the tax invoice



7. Why is the delivery of a commodity under a physically settled contract

subjected to GST?

Under the Goods and Services Tax (Exempt Supply) Order 2014, transfer of

ownership of futures contract or transfer of ownership of derivatives relating to

commodities is exempted from GST. However, settlement of futures contracts by

way of physical delivery of commodities is subject to GST at standard rated.

8. What price will be used for GST computation, upon delivery of a commodity

under a physically settled contract?

GST is computed based on tender amount. The reason is to standardise the

pricing applied for the buyer, seller and Clearing House.



9. Can you explain the process flow of the GST on tender amount on physical

contract and the parties who need to issue the tax invoice?

10. Please explain the tax invoicing process for Phase I and 2 of Bursa’s implementation of invoicing and collection of GST?

In Phase 1, the tax invoice will be issued by Bursa Finance on a monthly basis at

the beginning of the following month. The tax invoice will reflect the monthly fees

by type of fees, rebates and total GST amount payable, amongst others.

In Phase 2, the DCS system will be automated to allow daily invoicing.



11. How will brokers reconcile the daily and monthly settlement in the DCS?

In Phase 1, prior to the enhancement of DCS, the monthly GST billed to brokers

will tie to the aggregate amount of the daily GST.

In Phase 2, the calculation of GST will be automated on a transactional and daily

basis. The daily statements can be reconciled to the brokers’ daily transactions.

12. Are initial and variation margins subjected to GST?

Initial and variation margins are not supply of services by Bursa and hence these

are not subjected to GST.

13. What is the treatment for give up and take up trades?

For commission on give up and take up transactions, BMDC will only facilitate

the commission if it is configured in the DCS. GST, if applicable, will be settled

between the two parties on their own.

For all other fees related to the transaction, i.e. exchange and clearing fees,

BMD/ BMDC will continue to charge and issue the tax invoice to the take-up

broker.

14. Is option premium subjected to GST?

No, option premium is not subjected to GST

15. Where is the GST obligation spelt out?

Consequential to the implementation of the Goods and Services Tax Act 2014,

BMD Rules and BMDC Rules will be amended to impose an obligation on

relevant participants to pay GST. The non payment of GST would result in action

being taken against the relevant participants under the relevant set of rules

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