FREPENCA
List of GST issues for RMCD consideration aimed at reducing burden on both Customs and
businesses
Category 1 – Compliance cost simplification without law change
Issue
High level
description
Explanation of issue and implications Clarification / Simplification of
of current view
process / changes to law sought
Customs comment
1
Foreign exchange
rate
In accordance with Paragraph 5 of the
Third Schedule of the Goods & Service
Tax Act, 2014 (“the Act”) where any sum
relevant for determining value is
expressed in a currency other than
ringgit, it is to be converted into ringgit at
the selling rate of exchange prevailing in
Malaysia at the time when the supply
takes place or in the case of the
importation of goods, at the rate of
exchange determined by the Director
General at the time applicable for the
calculation of customs duty or excise
duty and valuation.
Customs agree to
consider on a
case-by-case basis
application for use of
other than daily
selling rates. For the
moment, businesses
are requested to
continue to apply
individually. We
understand that many
such requests have
met a favourable
response from
Custom’s.
We wish to ask Customs to expand
the relaxation of the use of the fx in the
Panel Decision 1/2014 to allowing the
use of fx currently used by the
respective companies e.g. average
daily fx or average weekly fx or
average monthly fx instead of a daily
selling rate for their sales / supplies.
The use of common fx among
companies in a group is to have
consistency in measurement of
individual company performance
within the group and will be/is on a par
with commercial fx rates in the
marketplace.
Paragraph 32(b) of the Guide on Tax
Invoice and Record Keeping issued by
the RMCD states the following:
We also wish to ask Customs to
extend the allowance for the use of fx
(a) In the case of local transactions, the mentioned in the aforesaid paragraph
use of daily exchange rates at the time of for imports ie to use the same fx
supply of any bank operating in Malaysia used for sales / supplies for their
is required.
imports.
(b) In the case of importation, conversion
of foreign currency should be at the
exchange rates published weekly by the
RMCD.
This approach would reduce business
compliance costs with no impact on
GST revenues as the need for
conversion is largely for reporting
purposes only with no net tax
The Panel Decision 1/2014 allowed the
following relaxation to the law:
(i)
The use of exchange rates
published by BNM, any commercial
banks in Malaysia or any banks
registered under BNM, any news
agencies eg Bloomberg, Reuters,
Oanda, foreign central banks eg
European Central Bank and
Federal Reserve Bank of New
York.
(ii) Provided the exchange rates must
be the prevailing rate (selling rate)
corresponding to the time of
supply, consistently used for
internal business reporting and
accounting purpose and used
consistently for at least one year.
collected from business to business
transactions.
Further, the use of the proposed fx
would enable businesses to comply
with the Panel Decision 1/2014 para
6(b)(ii) “..consistently used for internal
business reporting and accounting
purposes” which otherwise, may be a
requirement by Customs which MNCs
may not be able to comply.
Extending the relaxation of the use of
fx in a revised Panel Decision (or a
clarification in an appropriate GSDT
Guide) would reduce the number of
businesses writing to Customs and so
reduce the burden of reviewing and
responding to numerous requests.
Currently many MNCs use a common
global foreign exchange rate (fx) within
the companies in the group which could
be fixed daily / weekly / monthly.
2
Reverse charge on
imported services –
accounting for output
tax and claim of ITC
In accordance with Section 13(1), (2), (3)
and (4) of the Act, imported services are
subject to GST and the company is
required to account for output tax on the
imported services (as though these were
supplied by company to itself) by way of
the “Reverse Charge Mechanism”.
In accordance with Section 13(4) of the
Act, the time of supply for imported
Whilst 1/2014 Panel Decision allows
for output tax to be accounted for at
either time of payment or receipt of
invoice is a welcomed compliance
simplification, if the input tax credit
cannot also be claimed at the same
time, then this is no simplification at
all.
We wish to request Customs to
Customs confirm that
the Panel Decision 1
specifically gives
concession to
accounting for output
tax only. Claiming of
input tax remain as
per Paragraph 38(e)
of the GST
Regulations.
services is when the supplies are paid for approve the accounting for, and claim
by the recipient.
of input tax credit, in the same taxable
period as the GST is payable, based
on the time when the transaction is
Paragraph 38(e) of GST Regulations
processed, be it invoice processing, or
specifies that for imported services
any other date, so long as this is
where reverse charge mechanism
applies, input tax credit is allowed to be before actual payment date.
claimed upon payment of the invoice.
Again, this impacts merely the way
GST is reported and not on the net
Panel Decision 1/2014 paragraph 2(ii)
only allows the accounting for output tax GST payable as in most cases the
based on invoice date and is silent on the GST payable will also be recoverable.
time of claim of input tax credit.
If RMCD has any concerns about
potential revenue leakage then it
could restrict this application to those
approved for ATS and/or ATMS only.
FREPENCA then
made the following
requests which
Customs agreed to
consider and issue a
separate guide in due
course:
(i) Reconsider the
businesses’
request to allow
the claim of input
tax and
accounting for
output tax on the
same date and
allow businesses
to do so either on
invoice date or
invoice
processing.
(ii) If (i) cannot be
allowed by
Customs, to clarify
Panel Decision 1
regarding the
claim of input tax
as many
businesses are
not aware of
Custom’s position
on the subsequent
claiming of input
tax.
3
Availability to pull
information on
imports from
Dagangnet - for
reporting / use of
value of goods
imported in K1/K8 for
GST03 reporting
Value of imported goods (CIF + Duty)
reflected in Custom declaration forms for
imports (K1/K8) are currently not input
into financial systems of most
businesses. However, these value of
imported goods (CIF + Duty) in K1/K8 s
are now required to be reported in Line
6a & 6b of GST03 return, or if a business
has approval under the Approved Trader
Scheme (ATS), be reported in Line 14 &
15 of GST03 return.
Based on the current practice of
businesses, the amounts of the imports
that get captured into the financial
system are cost of goods purchased
based on final invoice from supplier, cost
of insurance, freight / carriage based on
invoices from the respective supplier and
custom duties, if any. These amounts do
not necessarily tie or is reconcilable to
the value of imported goods (CIF + duty)
reflected in the K1/K8 due to the
following reasons:
(i)
the different foreign exchange rate
used in K1/K8 and financial
system, to convert the value of
purchase in foreign currency (refer
also item 1 of this Appendix); and
(ii)
the insurance and freight amounts
declared in the K1/K8 at most times
are estimates;
We wish to request Customs to firstly
acknowledge the inherent differences
of value of imports (CIF + duty) for
K1/K8 and amounts captured into the
financial system and not require
businesses to prepare reconciliations.
We would use the value of goods
imported as reflected in K1/K8 for
GST03 reporting.
We suggest that Customs makes
available information from Dagangnet
{information on value of imports (CIF +
duty)} to companies for GS03 return
reporting purposes.
We understand that the Singapore tax
authorities allow information from
Tradenet to be made available to
companies to download for Singapore
GST reporting purposes.
In Australia taxpayers who have
applied for a special scheme to defer
the payment of GST on their
importations, have the GST amount
payable printed directly on their GST
return by the tax authorities.
Custom’s appreciate
the concerns being
raised by
FREPENCA in
obtaining the
necessary
information. Customs
agreed to look into
how it may be able to
assist businesses to
make arrangements
with Dagangnet.
As such, if businesses are now required
to compile the value of imports (CIF +
duty) for reporting in GST03 return,
businesses need to re-configure the IT
system and accounting process to
capture the amounts for mere purpose of
GST reporting and has no value-add to
the business.
4
Provision of space to In accordance with Paragraph 5(3) of the
canteen operator
First Schedule of the GST Act, goods
held or used for the purposes of the
business that are put into private use or
made available to any person for use, for
any purpose other than a purpose of the
business, whether or not for a
consideration, the usage or making
available of goods is a supply of
services.
5
Gift Rule – not
claiming input tax
It is common practice for large
manufacturers located in the various
special zones, where access to food
outlets for their employees is not
readily available, for employers to
provide canteen facilities for their
workers. This is also good business
practice in that it reduces staff
absences and boost staff morale
increasing productivity and business
profits.
There appeared to be
differing views within
Custom’s on this
issue. On the one
hand the supply of
free space to a
canteen operator
could be seen as
being for business
use as per
FREPENCA
It is not uncommon for employers to offer
submission and so
canteen operators the use of space for
Arguably, the provision of the space to the provision of
free within their facilities from which to
the canteen operator is for the
services for free to a
operate the canteen.
furtherance of the businesses
non-connected party
operations and can be distinguished
is out of scope.
We are seeking Customs confirmation
from the provision of businesses
Alternatively this is a
that such transactions are out of scope of assets to a third party for no
supply of a business
the GST as the use of business assets is consideration and should be treated
asset for free and a
for the purposes of the businesses. We
as out of scope. This should be the
deemed supply at the
also seek Custom’s concurrence that no case irrespective of whether the
standard rate.
Gift rules are triggered and that there is Canteen operator is required to
Customs will discuss
no private / non-business use of assets. provide food at below OMV to that
this issue in their
businesses’ employees.
Committee meeting
and issue guidaince
in due course.
The gift rule does not apply to the giving Another way of reducing the burden
Customs does not
of gifts which are zero rated, exempt or
on businesses of having to track gifts agree. However,
credit on acquisition
where the input tax credit was blocked.
is to allow them to exclude gifts from
the Gift Rule where they choose not to
claim the input tax credit on its
acquisition.
We wish to seek clarification that this
would apply equally to where the
employer chose not to claim the input tax
credit.
We refer you to the situation in
Singapore where this choice is
permitted and provide an extract from
the Singapore GST: General Guide
for Businesses:
Example
A local GST-registered company (H)
purchased 2 hampers from a GST
registered supplier on 1 Oct 2013 at
$190 (exclusive of GST, inclusive of
GST price is $190 x 1.07 = $203.30).
H chose not to claim input tax on its
purchases. H subsequently gave both
hampers to one employee during a
company function for free to reward
him for his good performance. Under
the gift rule, H is required to account
for output tax on the hampers since
the gift inclusive of GST costs more
than $200. However, since H did not
claim input tax on its purchase of the
hampers, H is not required to account
for output tax. If H has claimed the
input tax incurred on its purchase of
the 2 hampers, H would need to
account for GST on these 2 hampers
(i.e. output tax to be accounted for =
$13.30 ($190 x 0.07)).
6
Use of incoterms as
primary indicator for
transfer of title &
Section 17(1) of the GST Act reads as
follows:
Customs had no
objection to
businesses
accounting for output
tax on the total
amount of purchase
per the invoice, at the
same time input tax is
claimed, on
assumption that all
the said purchases
are meant for gifts at
a later time. In other
words it was okay for
businesses to pay
more GST than may
otherwise have been
payable and have to
track gifts given to
employees.
We are of the view that incoterms are The discussion
not to be the only factor in
couldn’t arrive at a
determination of transfer of title and as resolution. In the
determination of
movement of gods
A zero rated supply is:
(a) Any supply of goods or services
determined to be a zero rated supply
by the Minister under subsection (4);
and
a consequence, used in the criteria for
determining whether a supply of
goods qualifies as export and be zero
rated. Reference must be made to the
commercial arrangements between
the parties, the contracts and other
(b) Any supply of goods if the goods are agreements relating to the transaction
in question.
exported.
Reference is also made to the Guide on
Export (draft) issued on 4 November
2013
We understand from the GST Act and
Guide on Export that a person who
exports goods outside Malaysia and is
named as exporter in the Custom’s
export declaration form (K2) would be
entitled to zero-rate the supply
irrespective of the incoterms.
However, we have in recent times,
through various conversations with
Customs officers been informed that
incoterms is to be used as a determinant
of point of title transfer and hence a
deciding factor on whether that supply
qualifies for a zero rate.
Case scenario extracted form Q&A 4 of
the Guide on Export:
Q4: My local customer ordered some
goods from me but he requested me to
send the said goods to his overseas
customer. Do I have to charge GST
when I invoice my local customer?
We ask Customs to revisit the Panel
Decision 1/2014 and issue clear and
consistent guidance on the
determination of export and
qualification criteria for applying a
zero rate to reflect this point.
interest of time, it was
suggested that a
separate meeting be
held for an in-depth
discussion. This is a
critical issue
impacting on the
competitiveness of
Malaysian exports.
A4: If you export the goods yourself in
your own name, you can zero rate that
supply even though you bill your local
customer. However you should maintain
the necessary documents to enable your
supply to be zero-rated.
We also draw your attention to item 5 (ii)
of Panel Decision 1/2014. The scenario
provided is exactly as Q&A 4 of the
Guide on Export. However, the response
provided is entirely different as the
response in the Panel Decision made
references to the “transfer of ownership”
which in this case, is deemed to happen
in Malaysia. Extract of Item 5(ii) of Panel
Decision 1/2014 is as follows:
Item 5(ii) Local company X purchases
goods from local manufacturer M and
request the local manufacturer M to
export the goods to his overseas
customers.
Whether the supply by the local
manufacturer M to the local company X
is subject to GST.
Reply to Item 5(ii)”
i.
The supply made by local
manufacturer M to the local
company X is a standard rated
supply, because the transfer of
ownership of the goods took place in
Malaysia;
ii.
The supply made by the local
company X to his overseas client
can be zero rated if the export
declaration was in the name of the
local company X.
According to Incoterms@2010,
published by The International Chamber
of Commerce
(http://store.iccwbo.org/incoterms-2010),
Incoterms 2010 do not deal at all with
transfer of title to the goods. Incoterms
2010 deals only with transfer of risks,
meaning risks of loss of or damage to the
goods while they are in transit.
We highlight another example on the
confusion which would arise if we are to
use incoterms as a factor in determining
transfer of title and consequently the
meaning of export:
Co A, a Malaysian GST registered
company supplies goods to Co B, a
foreign customer on ex-works incoterms.
Co A is named as exporter in the
Customs export declaration form
(K2/K8).
In this scenario, if we were to use the
meaning of export as in the GST Act and
Guide to Export, the supply by Co A
would qualify for zero rate,
If we were to throw in the incoterms as
determinant of transfer of title happening
in Malaysia, even if Co A is the named
exporter in the Customs Export
Declaration form (K2/K8), it appears that
from the Panel Decision, this supply is
standard rated.
7
Definition of
Third Schedule paragraph 2(1), GST Act Within the context of paragraph 2(1),
Customs clarified that
connected person
8
Movement of goods
from PCA into
Bonded Warehouse
provides for definition of connected
persons as follows:
(a)
they are officers or directors of one
another's business
(b)
…..
(c)
…
Businesses have been receiving
differing view on whether, for GST
purposes, the movement of goods
located in PCA and placed into a bonded
warehouse will be treated as those
goods having been exported.
GST Act, we would like Customs to
clarify the meaning of:
(i)
Officers;
(ii) “…. …one another’s business”
In particular we ask Custom’s to
confirm that officers or directors of a
business are not connected persons
of the same business that they are
officers or directors of.
We wish to clarify whether, for GST
purposes, the movement of goods
from PCA into a Bonded Warehouse
will be treated as an export of those
goods.
This is the treatment that applies in a
Section 17 of the GST Act mentions that number of neighbouring countries.
any supply of goods is zero rated if the
goods are exported. Export in GST Act is
given the same definition as export in the
Customs Act, 1967 (Customs Act) For
purposes of the Customs Act, goods
may be placed in bonded warehouse for
export without the payment of customs
duty. However, for GST, it is silent and
therefore appears that goods placed in a
bonded warehouse are subject to GST
(local sales)
This can have significant implications on
businesses eligibility for special
item (a) is meant to
define that 2
companies are
“connected persons”
when they have
common officers or
directors.
This issue was not
discussed as
Customs indicated
that they, together
with MoF, were in the
midst of discussions
on treatment of
bonded warehouses.
schemes such as ATMS that require at
least 80% of their goods to be exported.
9.
Approved toll
manufacturers
scheme (ATMS)
Regulation 91 of the GST Regulations
2014 provides that a person making
supplies comprising the treatment or
processing of goods for and to a person
who belongs to another country and
exports at least 80% of the finished
goods may apply for ATMS.
We request Customs to issue clear
guides on the definition of a toll
manufacturer and clarify whether
does billing arrangement (where
separate billings for value add portion
and for components and parts used
for processing and treatment) affect
the defining of a toll manufacturer.
In reality, many manufacturers have
arrangements, not only to supply the
service of treatment or processing but
may also purchase many components
and parts as specified by the principal to
be built into the final finished product as
part of the treatment or processing
service. Often times, separate billings for
service portion and components & parts
are raised.
Many discussions with Customs officers
has caused some confusion on the
definition of a toll manufacturer which
then brings about concerns on the
application for the ATMS which requires
the local toll manufacturer, overseas
principal and the local end customer to
make a joint application, submitting the
Toll Manufacturing agreement which
contains many private & confidential
information.
Custom’s were of the
view that a toll
manufacturer was
essentially someone
who processed
goods belonging to
another business and
that that ownership of
those goods
remained with the
business they had
contracted with.
Customs agreed to
look into and issue
further guidance on
criteria to determine
who is a toll
manufacturer for the
purposes of the
various GST
schemes.
Category 2 – Compliance cost simplification which may require law change
10
Reverse charge on
imported services
Section 13(1) of the GST act imposes a
reverse charge obligation on persons in
We are again asking Customs to
consider a more pragmatic approach
Custom’s to consider
this at an appropriate
receipt of imported services for use in
their business.
The requirement that all services
imported for business use be reverse
charge places an unnecessary burden
on business. It is understandable that
Customs would wish to ensure that it
collects GST on services consumed in
Malaysia. However, in nearly all
instances the GST payable is claimable
as an input tax credit by that same
business. The only time there is a net
gain to revenue is if that business is
using the imported services to make an
exempt supply – this covers a small
population of Malaysian businesses.
in achieving the desired outcome.
time.
Rather than require all businesses to
reverse charge an alternative
approach could be to either:
(i)
Only make reverse charge
compulsory for businesses
not making wholly taxable
supplies; or
(ii)
Only make reverse charge
compulsory for businesses
where the imported service is
not used wholly for making a
supply for which full input tax
credit would not be available.
Either of these approaches achieves
the desired outcome without imposing
an unnecessary burden on the
majority of businesses. Again you
may wish to look to the practice in
Australia and New Zealand which has
adopted the second of the
approaches outlined above.
11
Bonded warehouse
(BWH, free
commercial zone
(FCZ), free industrial
zone (FIZ) / licensed
manufacturing
warehouse (LMW)
company be treated
as outside Malaysia.
Overseas companies with no presence
in Malaysia are required to appoint a
GST agent in order to register for GST in
Malaysia if it is making taxable supplies
in Malaysia. Many overseas companies
perceive there are permanent
establishment (PE) risks in registering
their overseas principal. Moreover,
registering for GST in Malaysia will
We are asking that Customs introduce See comment to Item
a special permit for a company who
8 above.
supplies to an overseas company /
overseas principal but drop ship the
goods into a BWH, FCZ, FIZ / LMW
companies in Malaysia to be GST
zero rate or suspended, whether
goods or service.
require costly IT System configuration.
We acknowledge that Customs has
provided the Approved Toll
The perception that registering their
Manufacturer Scheme (ATMS) for
overseas principal may result in
businesses under toll arrangement
unnecessary attention from tax
having overseas principal but would
authorities means that many may simply like to highlight to Customs that in
choose not to register – this has been the many instances, the toll arrangement
experience in many other GST countries. is very complex and may involve
Non-registration will result in Malaysian
several parties along the supply chain
exports being more expensive as the
within Malaysia and therefore involves
GST charged is not recoverable by the
movements of goods from toll
overseas principal contrary to the
manufacturer to toll manufacturer for
intention of the GST Act.
value add services and purchase by
foreign principals of goods from local
Below are 2 very common specific
supplier to be placed with various toll
scenarios happening in Malaysia:
manufacturers for assembly. This
makes the application for ATMS
A. Sale by local manufacturers to
approval complex and tedious, not to
overseas company with goods drop mention that processing the
application may take long time as it
ship to BWH, FCZ.FIZ/LMW
requires Customs to understand each
company
and every application.
Currently, there are many sale
arrangements by local manufacturers
with overseas customers where goods
are delivered into BWH or FCZ or FIZ /
LMW company with subsequent title
transfer happening within the BWH / FCZ
or somewhere along the delivery chain in
Malaysia. The GST law states that these
are local supplies subject to GST. Most
of the goods are eventually exported out
of Malaysia by the foreign customers but
some of the goods may be sold to local
customers. These arrangements create
the following dilemmas for the overseas
companies:
Our request for Customs to grant
special permits for a company who
supplies to a overseas company /
overseas principal but drop ship the
goods into a BWH, FCZ or FIZ / LMW
company in Malaysia to be GST zero
rate or suspended, whether goods or
services, produces the same GST
outcome as if the overseas principal
had registered for GST but reduces
the need for such registration resulting
in both administrative and compliance
cost savings.
(i)
The GST charged by the local
manufacturer to the overseas
supplier will become an additional
cost of doing business in Malaysia
thus making Malaysia
uncompetitive, unless the
overseas entity gets itself GST
registered.
(ii)
Registering for GST will create
other issues as mentioned in the
first paragraph of this section,
again additional costs of doing
business in Malaysia.
B. Toll manufacturers with foreign
principals where goods, after value
add are drop ship to BWH, FCZ, or
another FIZ/LMW company.
Currently, many toll manufacturing
arrangements with foreign principals
require local toll manufacturers to
deposit the goods (after value add) into
either a BWH or FCZ or another FIZ
/LMW company. Some of these goods
are then on-sold by the foreign principal
to local customers. This arrangement
creates the following dilemma:

Drop shipment of the goods (after
value add) into a BWH or FCZ
constitutes a local sale by the foreign
principal, thus causing the local toll
manufacturer not able to meet the
export requirement to qualify for
Approved Toll Manufacturer Scheme
(ATMS), without which, value add
services are subject to GST.
12
Services on goods
eventually exported
to be zero rated
Section 14 of the GST Act provides for
the place where supplier of services
belongs. If the supplier of services
belongs to Malaysia, then the supply of
service is subject to GST unless the
supply is zero rated under the Goods &
Services Tax (Zero-Rated Supply) Order
2014 (“Zero rated Order”).
Extract of paragraph 12 of Second
Schedule of Zero rated Order reads as
follows:
In order to put Malaysia on level
Custom’s to consider
competitive ground with our
this at an appropriate
neighbouring countries who are also
time.
vying for foreign direct investment
from MNCs and which currently
accord GST zero rates to such service
charges, we ask Customs to accord
zero-rating to all services on goods
which are eventually exported.
We do not believe that it was the
intention of the GST law to impose
additional costs on Malaysia’s export
Services supplied under a contract with a competing industries but rather to
person who belongs in a country other
improve its international
than Malaysia and which directly benefit competitiveness.
a person who belongs in a country other
than Malaysia who is outside Malaysia at
the time the services are performed, but
shall not include :
(a) Any services comprising either one
or both of the following:
(i) The supply of a right to
promulgate an advertisement by
means of any medium of
communication; and
(ii) The promulgation of an
advertisement by means of any
medium of communication; or
(b) Services which are supplied directly
in connection with:
(i) A land situated in Malaysia or any
improvement to such land;
(ii) Goods which are in Malaysia at
the time the services are
performed; or
(iii) Capital market products as
defined in the Capital Markets
and Services Act 2007 [Act 671]
traded in Malaysia or insurance
contracts where the coverage
relates to risk in Malaysia and
includes any similar transaction
conducted in accordance with
the principles of Syariah.
Malaysia is heavily dependent of foreign
direct investment and is a manufacturing
base for many large MNCs. Many
support industries to these large MNCs
sprang up in Malaysia, setting up base
close to their major customers. Many of
these manufacturing plants of MNCs and
the supporting industries provide key
services to these foreign companies
such as :
(i) Research & development;
(ii) Toll manufacturing (and do not
qualify for ATMS);
(iii) Re-manufacturing;
(iv) Repair and rework;
(v) Failure analysis and testing; and
(vi) Handling services.
13
Billing for
non-recurring
expenditure (NRE) to
be zero rated
In the electronics industry, there are
various billing arrangements apart from
the billing for the finished goods which is
often based on agreed upfront selling
price by the local company with their
overseas customers where the final
finished goods are eventually exported.
However, at the time these other billings
are raised, the goods are still in
Malaysia. Such arrangements have
been agreed upon for various reasons.
Examples of such billings are:
(i) Billings for the purchase of toolings,
jigs, fixtures and equipment used
specifically for a customer in the
local company’s premises. These
toolings, jigs, fixtures and equipment
usually have a lifespan based on
when the finish product reaches
‘end-of-life’;
Similar to item 11 above, we ask
Customs to accord zero rating to all
such billings where these can be
clearly related to finished goods that
are eventually exported outside
Malaysia.
We understand that Singapore has
adopted zero-rating for item (i).
Custom’s to consider
this at an appropriate
time.
(ii) Billings for components, materials or
parts to be used in the production of
finished goods prior to the
completion and billing of finished
goods (billing in advance);
(iii) Recovery of price fluctuations in the
purchase price of components,
materials and parts for the
production of finished goods, and
adjustments to prices / price
re-evaluation. Such billing usually
occurs before the finished goods are
completed and ready to export;
(iv) Lump sum service cost,
manufacturing overheads, labour
costs, overtime payments not
budgeted into initially agreed selling
price but identifiable to a specific
order of finish goods, billed
separately.