welcome to
Concurrent
Session 1D
Bhupinder Singh
Aaron Bromley
Goods & Services Tax
(GST) Supply –
Time, Place and Value
www.mia.org.my
Malaysian Institute of Accountants
Customs & Indirect Tax
GST & SUPPLIES:
TIME, PLACE & VALUE
Bhupinder Singh
Executive Director, Ernst & Young
Aaron Bromley
Senior Manager, Ernst & Young
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GST
OVERVIEW
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Scope of Tax
GST is imposed on:
• supply of goods and services in Malaysia
• importation of goods into Malaysia – GST is charged on importation
• importation of services into Malaysia – GST is charged by using
“reverse charge” mechanism (e.g. consultancy, technical services, etc.)
GST
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Import of Services
Import of Goods
Reverse charge
mechanism
Physical movement of
Goods into Malaysia
Supply of Goods /
Services in Malaysia
[Belonging Concept / Where
Supplier is Located]
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Scope of Tax
Supply:
• all forms of tangible goods or intangible services.
• Examples include the sale or disposition, barter, exchange,
license, rental, lease, right to use, entry into obligations.
E.g. Manufacture and sale of goods - - treated as a supply
Delivery of services - - another supply
• anything which is not a supply of goods will be treated as a
supply of service.
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Types of Supplies
All supplies fall within 4 categories:
• Standard rated
Taxable Supplies
• Zero rated
Taxable Supplies
• Exempt
No GST (input tax not
recoverable)
• Out-of-Scope
No GST
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Input tax
recoverable
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Types of Supplies
Examples of supply under each category:
• Standard rated
Local supply of goods / services
• Zero rated
Export sales / international services
• Exempt
Certain financial services, healthcare services,
education services, domestic transportation
of passengers for mass public transport, sales /
lease / rental of residential land / property
• Out-of-Scope
Transfer of business as going concern, sales
of property outside Malaysia, third country sales
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TIME OF SUPPLY
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Time of Supply / Tax Point
As a general rule, GST has to be accounted for at the earliest of the following:
1. Basic tax point
For goods:
 at the time of removal, or
 at the time the goods are made available to the customer.
For services:
 performance of the service.
2. Tax invoice is issued
3. When payment (all or part) is received
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Exception: 14-Day Rule
•
If the GST invoice is issued within 14 days of the basic tax point and no payment
has been received, then the time of supply is the date of the GST invoice, unless
the taxable person elects not to use this 14-day rule.
14-Day Rule
Normal Rule
20 Jun 2007
Goods
Delivered
25 Aug 2007
Payment
Made
When do you pay GST?
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20 Jun 2007
Goods
Delivered
1 Jul 2004
Tax Invoice
Issued
When do you pay GST?
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PLACE OF SUPPLY
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Place of Supply
•
Place of supply is important as GST is charges on supply of goods /
services made in the country (i.e. Malaysia)
•
Place of supply for:
 Goods
A supply of goods is treated as made in Malaysia if
the supply originates from a place in Malaysia. The place of
supply is where the goods are removed or made available to
the customers.
Goods manufactured and sold in Malaysia - - Standard Rated
Goods manufactured in Malaysia and exported - - Zero Rated
 Services
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A supply of services is treated as made in Malaysia
if the supplier has a business establishment or fixed
establishment in Malaysia otherwise if his usual place of
residence is in Malaysia.
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GST Considerations:
Drop Shipment
Coy A
(Malaysia)
Should Coy A
(Malaysia) impose
GST on this invoice?
Invoice @ USD6,000
Delivery of
Goods
Is Coy B (Japan) required to be
registered for GST in Malaysia?
Customer
(Malaysia)
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Invoice @ USD10,000
Coy B
(Japan)
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GST Considerations:
EPC Contracts – Supply and Installation of Goods
Coy A
(Japan)
Delivery of Goods
and Supply of
Installation
Services
Sub-Contract for Installation
or Construction Services
What are the GST issues?
Customer
(Malaysia)
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Provide Installation or
Construction Services
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Coy B
(Malaysia)
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GST Considerations:
R&D Design Services
Coy A
(Malaysia)
Perform R&D
Services for
Goods Located
in Malaysia
Coy B
(Japan)
Invoice @ USD50,000
Should Coy A impose GST on the
R&D design services performed in
Malaysia but bill to Coy B (Japan)?
Customer
(Malaysia)
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GST Considerations:
Warranty Issues – Provide Repair Services
Invoice @ USD200,000
Price of goods sold (inclusive of warranty)
Customer
(Malaysia)
Back-to-Back
Warranty
Coy A
(Malaysia)
Back-to-Back
Warranty
Coy B
(Japan)
Requires Coy A to provide repair
services to defects in Malaysia
Charge GST to Coy B in Japan – not recoverable
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VALUE OF SUPPLY
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Value of Supply
• GST is charged on the value of supply of goods and
services whenever time of supply conditions are met.
• Value of supply can be for a consideration in either:
 money (GST exclusive value + GST); or
 open market value (inclusive of GST).
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Taxable Supply - Value
Example: Supply of Goods
• 2x Widgets @ RM100.00 each
RM200.00
• Delivery of Widgets
RM 20.00
• GST –Exclusive Value
RM220.00
• GST @ 5%
RM 11.00
• VALUE OF SUPPLY
RM233.00
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Taxable Supply – Value (Non-Monetary Consideration)
Example: “Food Co.” agrees to provide “Stadium Co.” with free product
provided it can place advertising boards at the Stadium during
matches.
Supply of Product (RM1050 GST-incl Market Value)
Food Co.
Stadium Co.
Supply of Advertising (RM1050 GST-incl Market Value)
Food Co.:
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DR1000 (Acquisitions)
DR 50 (Input Tax)
CR1000 (Revenue)
CR 50 (Output Tax)
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Importations - Value
Import of motor vehicle:
• CIF Value
• Import Duty @80%
RM100,000
RM 80,000
RM180,000
• Excise Duty @60%
RM108,000
RM288,000
• GST @5%
• TOTAL
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RM 14,400
RM302,400
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“Reverse Charge” on Imported Services - Value
• Overseas Invoice:
• Malaysian RM @ 2.8
• GST @ 5%
AUS$10,000
DR GST Input Cost
RM28,000
RM 1,400
1,400
CR GST Output Cost
1,400
Net GST Position (wholly taxable entity)
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0
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Thank you!
If you have any questions, please contact :
Bhupinder Singh
Tel : (6)03 2087 4405
Fax : (6)03 2095 7043
E-mail: bhupinder.singh@my.ey.com
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