How GST Affect Your Business - Mandatory Registration

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GST Malaysia Diary for laymen: A4.To businesses

Generally speaking, if your business is providing taxable supply and annual turnover is more than RM500,000, you are subject to Sec 20 GST Act 2014 , mandatory registration. There is not much different from sole proprietor who providing business from a legal entity view (Sdn Bhd, Bhd & etc) in determining whether your company is subject to GST registration. 

If your company is providing taxable supply, different sources of taxable supply and the annual total amount of taxable supply is more than RM500,000, you have to take action to register your business under Royal Malaysian Custom Department (RMCD) before 31 December 2014. Fairly say that, unless the company is an inactive company (dormant) or an investment holding company (with rental income from residential property, mainly receiving dividend from subsidiary or dealing with exempted supplies), you are most likely subject to be register.

Kindly be noted that, a late registration penalty of not more than twenty five percent will also be imposed on the unpaid tax due. If the person refused to be registered, he shall be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding three (3) years or to both.

Note: Thanks for your time spending with me to read on my thought, for continue reading, please refer to my topic E0. End topic: Actions you need to prepare for GST implementation;

If you need assistance in registering your GST license, please do not hesitate to contact me, an GST agent authorized under 170 GSTA, 2014 .

 

Who are liable to register for GST (Malaysia) - Section 20 - Mandatory registration of GST tax payer

Note: Kindly be noted that this post may subject to change and merely for the reference who are used to legislation wording in the act.


Section 20 - Mandatory registration of GST tax payer:-

GOODS AND SERVICES TAX  (AMOUNT OF TAXABLE SUPPLY) ORDER 2014 

Goods and service tax Malaysia guide for laymen/layman:- A3.To sole prop retailer

Dear Entrepreneur, please check that whether your yearly total turnover (sales) is achieving to an amount of RM500,000?  Or the total turnover from all sources of business (if you selling furniture, part-time distributing newspaper, repairing electrical equipment, providing renovation services & etc.) for last 12 months is more than RM500,000,  you are mandatory to be register.  

A late registration penalty of not more than twenty five percent will also be imposed on the unpaid tax due. If the person refused to be registered, he shall be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding three (3) years or to both.

RM500,000 is an amount that the monthly sales of RM41,000. Or in more physical thought, an average living cost may goes to RM40K a year, business profit margin is average on 30% of turnover. A cooper operating a business with one to two staff, they need a turnover of RM533,333 to survive (RM40K/30% x 4). 

Note: Thanks for your time spending with me to read on my thought, for continue reading, please refer to my topic E0. End topic: Actions you need to prepare for GST implementation. 

If you face any problem or issues either related to direct tax (income tax) or indirect tax (GST, import duty, sales tax, service tax & etc) you are most welcome to contact me. I would only charge my friend the mobilization fees (if necessary) base on the business size and time spend.

Goods and service tax Malaysia guide for laymen: First gazetted zero rated list of supplies

P.U.(a) 272.2014 - GST Zero Rated Supplies

Simple GST Guide for Laymen: First gazetted GST exempt list of supplies

P.U. (a) 271.2014- GST Exempt Supplies

GST Diary for layman - A2. What is GST to consumer

Not to be surprise, I would generally say that, everyone who living in Malaysia will start to do some contribution to our nation economy development through paying GST. Yes, everyone including your pet, when you buy pet food from a taxable person (pet shop).

To be more simple, all the stuff that you could not find their name in either GST Exempt List or Zero Rated List, you may need to pay an additional 6% GST on top of the price that you paying now if you are buying from a registered person (expected nearly >90% of business ). 

Kindly be noted that, there are some differences between GST vs Sales & Services tax. Other than the items to be included, the seller involved in GST is also many more timesssss than the Sales and Services tax. 

E.g. Take account that a common restaurant takes space of 24 x 75 sq. with 60 seats could serve for 480 heads count a day, total 14,400 heads a month or 172,800 heads a year, each customer averagely RM15 per visit, the annual turnover of the restaurant is about RM2,592,000, which is not even up to the service tax threshold of RM3,000,000 for restaurant operate outside hotel. Further, count on how many restaurants be fully engaged all the time from open to closed? We would say that’s nearly impossible unless the restaurant is a retailer chain of business or has branches to contribution and get to meet the threshold. However, GST reduce such threshold from RM3,000,000 to RM500,000, which is a restaurant with same physical set up, charge not more than RM10 per visit, only the lunch & dinner time is fully engaged, yearly turnover could be easily more than RM864,000 (RM10 x 60 x 4 x 30 x 12). 

So, please do not be surprise that the Indian Mamak store in next door is collecting GST from you, do not surprise that even a small convenient stall with only half shop lot book store operate below the low cost flat is also collecting GST from you when you getting a magazine there.

Note: Thanks for your time spending with me to read on my thought, for continue reading; please refer to my topic E0. End topic: Actions you need to prepare for GST implementation

GST Malaysia Diary for laymen - A1.1.Meaning of "Supply" in GST

Sec 4 - Meaning of “supply”, GST Act 2014

(1) subject to subsections (2) and (3), “supply” means all forms of supply, including supply of imported services, done for a consideration and anything which is not a supply of goods but is done for a consideration is a supply of services.

(2) Matters to be treated as a supply of goods or a supply of services shall be as specified in the First schedule.

(3) Matters to be treated as neither a supply of goods nor a supply of services shall be as specified in the second schedule.

(4) The Minister may, by order published in the Gazette, amend the First schedule and second schedule.

(5) Any order made under subsection (4) shall be laid before the Dewan Rakyat.

Bi Act 762 Sch 1 2 Sec4

Budget 2015 (Malaysia)/ Budget speech 10 Oct 2014

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GST Diary for layman - A.1.Scope of GST

GST is charged on:-

a)      any taxable supply of goods and services;

b)      made in the course or furtherance of any business; 

c)       by a taxable person;

d)      in Malaysia.

     Ref: Para 5, GST General Guide

In other words, Malaysia will soon to have a superior tax regulation system not only charge on certain persons who need to fulfil some requirement (e.g. at least earning RM14,000 by not claiming any alternative relief may subject to income tax), but also a pet fish eat something that may cost a buck (e.g.RM1).Example: any taxable goods (fish food) supply by a taxable person (pet shop) is subject to GST. Thus, Malaysia will sooner become a developed nation that even a pet fish, dog, cat will also take part to contribute their portion to the nation economy via GST.

When  we talk about the word “taxable supply”, we do not have specific list or mentioned item would be fall under the category of “taxable supply” same like Sales Tax or Services Tax, but we do have an exemption supplies list of goods (residential land and property) and services (e.g. Financial, Accommodation Education & etc.). In short, everything is not exempt supply they are taxable supply. Thus, you could imagine that when the moment you came out from restroom in a shopping center which they collect a 20 cents from you, and if they are GST taxable person, you are required to pay additional 6% GST to Royal Malaysian Custom Department (RMCD)on top of the 20 cents collected by the taxable person.

To specifically understanding on each individual item (or specific item you are dealing with) is subject to GST, kindly refer to my topic [Types of supplies].