special schemes

PEJABAT PELAKSANAAN GST

KEMENTERIAN KEWANGAN 1

GST SEMINAR FOR

AUTOMOTIVE INDUSTRIES

2014

SPECIAL SCHEMES

KHILMIE BIN GHAZALI

Unit Khas GST, JKDM, Putrajaya.

Venue : Grand Bluewave, Shah Alam.

Date : 25 March 2014

2

APPROVED TRADER SCHEME (ATS)

3


• Approved Trader Scheme (ATS) Sec. 71 (1)-(2)

DG is allowed to suspend the payment of tax chargeable on goods imported by any taxable person

Approved person who is granted approval for ATS is

allowed to suspend GST on the importation of goods GST due on all goods imported in a particular month

would be accounted for in that month (the month where importations take place)

4

Overseas

person

Approved

person

ATS - Concept

Malaysia ATS

Approved person under ATS imports goods

1.

GST is

suspended

Customs no.1

2. Makes declaration

on imported goods

GST-03

Amount of GST

Suspended

3. Approved person declares the total amount of GST suspended in a taxable period


5

AA Pte Ltd

overseas

Malaysia

Port (December 20XX)

Value of imported

Goods (CIF + Duty

Import )= RM100000

GST 6%= RM6000

XX Sdn Bhd

ATS approval

GST-03 (December

20XX)

Customs no.1

GST is

suspended

Total value of goods

imported under ATS

= RM100,000

Total value of GST

suspended= RM6000

ATS - Concept


6

Persons eligible for ATS:

Companies located within Free Industrial Zone (FIZ)

Licensed Manufacturing Warehouse (LMW)

International Procurement Centre (IPC)

Regional Distribution Centre (RDC)

Toll manufacturers under ATMS

Jewellery manufacturers under AJS

Companies with turnover above RM25 million and at least 80% of their supplies made are zero-rated

Any other person approved by the Minister


7

Approval subject to the following criteria: Must be registered under Sec. 20 of the GST Act 20XX

Participant must make wholly taxable supply

Must be a registered user of electronic service

Must submit monthly GST return

Must makes declaration on the importation of goods

electronically

Must have good compliance record as a GST payer

Must have good accounting and internal control system

Must furnish security if required; and Any other conditions as may be determined by DG


8

Goods Not Eligible under ATS -

Liquor, beer, wine and spirits

Tobacco and tobacco products

Any goods to which input tax credit is disallowed (blocked input tax)

Goods for personal use and non-business use


9

ATS – Group Registration A company registered under group registration is allowed

to apply for this scheme

Representative member responsible to declare the amount of tax suspended in GST return

Goods imported under ATS must be used for business

Imported goods cannot be sold or distribute among other

members


10

Administratively the RMC will monitor the approval

Application can be made in a Special Scheme Form

Status of the applicants

Sales turnover and the details of zero-rated supplies per annum

Approval would be given for a period of 2 years

Approval subject to renewal and notices would be sent 2 months before

expiry date. Second notice will be issued 14 days before expiry date

The approval of this scheme will be revoked by DG if

provided false, misleading or inaccurate declaration

ceased to satisfy any eligibility requirements

failed to comply any conditions imposed

applied to deregister by the approved person


11

APPROVED TOLL MANUFACTURER

SCHEME (ATMS)

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APPROVED TOLL MANUFACTURER SCHEME (ATMS)

• Approved Toll Manufacturer Scheme Sec. 72(1)-(8)

Any taxable person (TM) are allowed to disregard the supply of goods (processed goods) and the supply of services for and to his overseas principal (who is belongs in a country other than Malaysia)

Any person (belongs in Malaysia) who receives the

processed goods from the TM shall account and pay tax as if he had himself supply the goods and acquired the goods in the course of furtherance his business

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Recipient accounting

ATMS - concept

Overseas

Principal

Local Customer Toll Manufacturer

TM imports

consigned goods

from the overseas

principal (ATS)

TM drop-ships finished

goods to local customer

of overseas principal

Malaysia

Overseas principal

invoices local customer

on finished goods

received

TM invoices overseas

principal for value-

added services

(disregard) 1.

2.

3. 4.

Local supplier

Local supplier deliver

goods on behalf of OP (ZR)

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Eligibility for approved under the ATMS Any toll manufacturer (a taxable person) who has contract(s) with

overseas principal (not a taxable person) He carried out value added activities with the overseas principal:

worth RM2 million or more (excluding the cost of raw materials supplied or belonging to the overseas principal) per annum; and 80% of the processed goods must be exported;

What types of value added activities are allowed under ATMS?

related to manufacturing, treatment, processing, finishing, assembling and other manufacturing-related works on consigned goods


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Upon

Application

of ATMS

(principal)

Expected

drop shipment

under toll

manufacturing

per annum

Other

taxable

supplies

In Malaysia

per annum

Total

Turnover

for

registration

(exclude

supplies

under TM)

Liability for

registration

Eligibility for

ATMS

P1 RM 300,000.00 - 0 No Yes

P2 RM300,000.00 RM100,000 RM100,000 No Yes

P3 RM600,000.00 - 0 No Yes

P4 RM400,000.00 RM200,000 RM200,000 No Yes

P5 RM400,000.00 RM500,001 RM500,001 Yes No

Approval under ATMS subject to:

The taxable supplies made by overseas principal other than toll manufacturing

activities are below the threshold

Eligibility to apply for ATMS


16

Approval

under

ATMS

Years Drop shipment

under ATMS

Other taxable

supplies in

Malaysia

Liability for

registration

Eligible of ATMS

ATMS P1 Year 1 RM300,000 0 No Yes

Year 2 RM500,000 0 No Yes

Year 3 RM700,000 0 No Yes

ATMS P2 Year 1 RM300,000 0 No Yes

Year 2 RM500,000 RM200,000 No Yes

Year 3 RM700,000 RM600,000 Yes No longer eligible for

ATMS

Eligibility of approval under ATMS depends on the status of overseas principal

If taxable supplies made by overseas principal other than the supplies made under ATMS

exceeded the threshold, he is liable to be registered

Not eligible for ATMS

Eligibility under Approved Toll Manufacturer Scheme


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Accounting of GST under ATMS

The supply is made by overseas principal

Local customer (registered person & non-registered person ) will account for output tax on the processed goods received by way of “Recipient Accounting”

Registered person – GST return (GST-03)

Non-Registered person – prescribed form (GST-04) Time of supply to account for GST under ATMS

The tax on the supply of the treated or processed goods received need to be accounted for based on the following (whichever is earlier): (a) When a payment in respect of the supply is made; or (b) When the recipient receives an invoice from overseas

principal relating to the supply

ATMS – Time of Supply

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Example: “Recipient Accounting”

Toll Manufacturer (A) delivers processed goods on behalf of overseas principal to the

local customer (B) on 30 April 2015

Overseas principal issued an invoice to local Customer (B) with the amount of

RM200,000.00 on 5 May 2015

If the local customer is a registered person, he has to account GST amounting

RM12,000 (6%XRM200,000.00)

If Local customer not registered under GST? OUTPUT TAX = RM12,000 INPUT TAX = RM12,000 Net Tax = 0

GST Return - May 2015(GST-03)

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GST No.4 (May 2015)

Value of supply RM200,000.00

GST amount payable RM12,000.00

If local customer is not a registered person

he has to account GST amounting RM12,000.00 (RM200,000 X 6%) in a prescribed form (GST-04)

he is not eligible to claim the tax paid as input tax credit the GST needs to be accounted not later than the last day of the

subsequent month from the month in which the supply is made

ATMS - Recipient Accounting

Prescribed Form

20


Approval subject to the following criteria:

Must be registered under Sec. 20 of the GST Act

Must be a registered user of electronic service

Must submit monthly GST return

Must have good compliance record as a GST payer

Must have good accounting and internal control system

Must furnish security if required; and

Any other conditions as may be determined by DG

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Administratively the RMC will monitor the approval

• Application can be made in a Special Scheme Form Details of the Toll Manufacturer Details of overseas principals and the contracts Details of the local customers

• Approval would be given for a period of 2 years • Approval subject to renewal and notices would be sent 2 months before expiry

date. Second notice will be issued 14 days before expiry date • The approval of this scheme will be revoked by DG if

provided false, misleading or inaccurate declaration ceased to satisfy any eligibility requirements failed to comply any conditions imposed applied to deregister by the approved person

22

WAREHOUSING SCHEME (WS)

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• Under WS

Importer/owner of the imported goods is allowed to suspend the payment of GST at the time of importation on goods imported and deposited in a warehouse.

The imported goods will be subject to GST when it triggers the duty point that is the time when such imported goods are taken out from the warehouse. The value of the imported goods is its customs value.

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• GST on goods deposited into the warehouse to be suspended • GST on goods moved from one warehouse to another warehouse to

be suspended • Intermediate supplies within a warehouse to be disregarded • The last supply is subject to GST (trigger the duty point) • Goods released to local market to be subjected to GST • Goods released to overseas market to be zero- rated • All goods and services consumed in warehouse to be standard-rated

WS - GST Treatment

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• GST on goods deposited suspended

• Supplies within warehouses disregarded

Warehouse 1

• GST on supplies received suspended

• Supplies within warehouses disregarded

Warehouse 2 • GST on supplies received suspended

• GST on supplies release from warehouse will trigger the duty point

Warehouse 3

• Goods released to local Markets to be subjected to GST

• Goods released to overseas Markets to be zero- rated

goods and services consumed in warehouse are standard rated

Imported

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Type of warehouses license under Customs Act 1967: Customs warehouse

Licensed warehouse

Duty free shops

Inland clearance depot

Determining the value and calculating GST:

The value of the last supply shall be treated as including any duties (whether customs duty or excise duty or both, if any)

The tax on the supply shall be payable at the duty point, together with the duty (if any).

Type of warehouses

• The last supply => the supply which is to be taken out from a warehouse, i.e. the supply that triggers the duty point

• Duty point => the time when the goods are removed from the warehousing scheme

Warehousing Scheme WAREHOUSING SCHEME (WS)

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Example Daim Sdn Bhd keeps his imported goods in a warehouse approved under section 65 of the Customs Act. One of his customers has agreed to buy certain goods at RM10, 000.00 and the goods are to be taken out from the warehouse. How does his customer determine the value of the last supply? (Prevailing import duty rate = 10% and GST = 6%)

29


Value of supply = RM 10,000.00 Rate of import duty = 10% Total duty import payable = RM1000.00 (10%X RM10,000.00) Daim Sdn Bhd’s customer needs to declare the following amount: Value for customs purposes = RM 10,000.00 Import duty (10%) = RM 1,000.00 Total value for calculating GST = RM 11,000.00 GST Payable (6% x RM11,000) = RM 660.00

30

MARGIN SCHEME (ATMS)

31

MARGIN SCHEME (MS)

Normal rule - GST is chargeable on the full value of

goods sold.

Margin Scheme

Margin scheme – allows GST on margin

avoids double taxation as second-hand goods re-enter

the economic cycle.

32

MARGIN SCHEME (MS)

Eligibility

A taxable person - who is in the business of buying

and selling second-hand motor vehicles.

approval given by the Royal Malaysian Customs

Department (RMCD)

For GST purposes, used motor vehicle is any used

motor vehicle which has been registered with the Road

Transport Department in Malaysia.

33

MARGIN SCHEME (MS)

Under the Margin Scheme

there is no input tax to be claimed on the purchase

(input tax not claimable)

A registered person who does not wish to use the

margin scheme for eligible goods must account for

GST in the normal way.

34

MARGIN SCHEME (MS)

GOODS QUALIFYING UNDER THE MARGIN SCHEME

The scheme is applicable for

used motor vehicles (includes vehicles which were

initially subject to sales tax before GST comes into

force)

Goods which were not subject to sales tax before

GST era can qualify under this scheme if the first

sale takes place within GST era. Examples of goods

that fall under this category are motorcycles with

certain c.c. and tractors

35

MARGIN SCHEME (MS)

CONDITIONS IMPOSED UNDER THE SCHEME

Any person may apply for this scheme subject to the

following conditions:

(a) must be a GST registered person.

(b) the goods must be previously purchased from an

individual or a non-GST dealer (no GST was

incurred on the purchase); or the goods were

previously bought from a GST MS registered person

who uses the Margin Scheme; or input tax blocked

goods purchased from GST registered person.

36

MARGIN SCHEME (MS)

CONDITIONS IMPOSED UNDER THE SCHEME

(c) the goods purchased and sold under the margin

scheme must be substantially the same goods.

However, repair, alterations, refurbishment and

renovations which do not affect the nature and the

essential character of the goods are allowed.

(d) no tax invoice to be issued by the approved person

(supplier) under this scheme and hence no input tax

to be claimed by the purchaser. He must meet the

record keeping requirements of the scheme

37

MARGIN SCHEME (MS)

The stock book or similar records that need to be maintained and

kept is as follows:

(a) Purchase details

(i) stock book number;

(ii) date of transaction;

(iii) purchase invoice number;

(iv) seller’s name and address;

(v) vehicle registration, engine and chassis numbers;

(vi) model and make;

(vii) total purchase price.

38

MARGIN SCHEME (MS)

(b) Sales details

(i) date of sale;

(ii) sales invoice number;

(iii) buyer’s name and address;

(iv) total sale price;

(v) vehicle registration, engine and chassis numbers;

(vi) model and make.

39

MARGIN SCHEME (MS)

(c) Accounting details

(i) purchase price;

(ii) selling price;

(iii) margin in sale;

(iv) tax rate on the date of the sale;

(v) GST due.

40

MARGIN SCHEME (MS)

Scenario 1

Down payment > Margin

Scenario 2

Down payment < Margin

Selling Price RM50,000

(inclusive of GST)

RM50,000

(inclusive of GST)

Down payment RM10,000 RM10,000

Loan RM40,000 RM40,000

Cost Price to dealer RM45,000 RM35,000

Margin RM(50,000 – 45,000)

= RM5,000.00

RM(50,000 – 35,000)

= RM15,000.00

GST chargeable

on the sale

6/106 x RM5,000

= RM283.00

6/106 x RM15,000

= RM849.05

GST on

down payment

6/106 x RM10,000

= RM566.03

6/106 x RM10,000

= RM566.03

GST to be

accounted

RM283.00

This amount will be

accounted wholly from

down payment as GST

chargeable on the sale is

limited to RM283.00 only.

RM849.05

This amount will be

accounted partly from

down payment

(RM566.03) and partly

from loan (RM283.02)

41

DESIGNATED AREA (DA)

DESIGNATED AREA

What is DA?

• PART XIV of the GST Act(Sections 161-167)

• Refers to Labuan, Langkawi and Tioman

• For the purpose of this Part, ‘Malaysia’ excludes

the designated areas.

Designated area refers to Free Ports ( Langkawi, Labuan and Tioman)

Supply GST Treatment

DA to DA : Goods and services

*No GST chargeable

within the DA: Goods and services

*No GST Chargeable

World to DA: Goods and Services

*No GST chargeable

DA to World: Goods and services

Zero Rated

* Except for petroleum and other goods as prescribed by the Minister

of Finance

DESIGNATED AREA

Supply GST Treatment

PCA to DA:

Goods

Services

*Zero-rated

Standard rated

DA to PCA:

Goods

Services

Standard rated

Standard rated

* Except for petroleum and other goods as prescribed by the Minister

of Finance

DESIGNATED AREA

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OTHER TRANSACTIONS

Gifts

Samples

Warranty

Disposal of assets

Goods lost/destroyed

46

Gift

Gift of goods not more than RM500 made in the course or furtherance of business to the same person in the same year :

not subject to GST

Samples

Imported trade sample given relief under GST Relief

Order

Trade samples given for promotion not subject to GST

on conditions

packed differently and labelled ‘sample’ or ‘not for

sale’

samples not packed differently is subject to

business gift rules of RM500

OTHER TRANSACTIONS

Manufacturer’s warranty normally includes:

after–sale services and repairs -not

subject to GST

any replacement of spare-parts free of

charge during the warranty period -not

subject to GST

47

WARRANTY

OTHER TRANSACTIONS

48

OTHER TRANSACTIONS

Disposal of Assets

Sale of capital assets, other than TOGC

subject to GST

Sale of assets as TOGC

not subject to GST (not a supply)

Given free

the value will be the open market value

subject to GST (>RM500)

Sell as scrap

the value will be the sale value of scrap

subject to GST

49

Goods Lost / Destroyed Imported goods lost while under customs control subject to GST may apply for remission from the DG

Goods lost while not under customs control if the incident happened before sales took place and proven with

supporting document (such as police report, insurance claim etc) no GST

if unable to prove with relevant documents, Customs has the power to assess and collect GST

Goods lost during delivery

if supply has not taken place - no GST

if supply has taken place (goods made available) - subject to

GST

OTHER TRANSACTIONS

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BUSINESSES’ PREPARATION

51


GST Implication on Prices

identify existing suppliers

talk to small suppliers to get them registered

review procurement policy to avoid tax cascading

negotiate prices with suppliers to pass on savings

review sales price

pass on savings

absorption of GST

Price Control and Anti Profiteering Act 2011

52

GST Implication on Stock Management

special refund

physical stock take on hand

documents to support refund

audit certificate


53

GST Implication on Cash Flow

need to analyse cash flow impact

cash recover from customer before GST is due

assess the need to provide for one time fund to cater

for GST payment upfront

review credit terms to customers

review requirement to apply for special schemes


54

GST Implication on Bad Debts

ensure a proper matching of GST payment to

government and payment received from

customers

monitor payment from customers

understand evidence of ‘reasonable efforts’


55

GST Implication on Invoicing

identify whether standard rate, exempt, zero rate or

out of scope supply

issuance of full and simplified tax invoice

requirement not to issue tax invoice for imported

services and second hand goods under margin

scheme

21 days rule

self billed invoice


56

GST Implication on Output Tax

gifts > RM500 subject to GST

commercial samples in a form not ordinarily

available for sale to the public not subject to GST

deemed supply eg, private use and disposal of

business assets subject to GST

supplies to connected persons


57

GST Implication on Input Tax

blocked inputs not claimable

incidental financial supplies

claim > RM500 to be supported by full tax invoice

De Minimis rule


58

GST Implication on Contracts

avoid long term contract without legal review

absorption of GST

pricing strategy to pass on savings

GST Implication on Human Resource

enhance staff understanding of GST

avoid unnecessary mistakes

false information may open to audit case

review policy on employee benefits


59

GST Implication on System

review system and processes

perform complete mapping of transactions to identify

required changes

GST liability on every transaction

use of online submissions to the Customs

computerised system

ready made software

upgrading present system


60

FORMS NO. TITLE

GST-01 Application for Goods and Services Tax Registration

GST-02 Application for group / Joint ventures registration

GST-02A Group member or venturer registration

GST-02B Notice of Change of representative member or venture operator

and removal of group member or venturer

GST-03 Goods and Services Tax Return

GST-04 Goods and Services Tax Declaration for non-registrant

GST-04A AUCTION OR SALE IN SATISFACTION OF DEBT DETAILS FOR

GST REGISTERED PRINCIPAL

GAZETTED FORMS

GST FORMS

End of Presentation Royal Malaysian Customs

(gst.customs.gov.my)

Thank You

GST Unit

special schemes

Documents