24 May 2018
GST Update
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- The Goods and Services Tax (Rate of Tax) (Amendment) Order 2018 (“Order”) was gazetted on 16 May 2018 and takes effect from 1 June 2018. Under the Order, all taxable supplies of goods and services which are made in Malaysia and all importation of goods into Malaysia, would be zero-rated.
- On 16 May 2018, the Malaysian Ministry of Finance also issued a press release stating that supplies of goods and services made in Malaysia, as well as, goods and services imported into Malaysia, which are currently standard-rated (i.e. subject to 6% GST) would be zero-rated with effect from 1 June 2018 until further notice. This would not affect “exempt supplies”, which would remain as exempt supplies for the purposes of the Goods and Services Tax Act 2014 (“GST Act”).
- The key provisions pertaining to supplies spanning a change in GST rate (“Supply Spanning a Change in Rate”) are encapsulated in sections 66 and 67 of the GST Act. If the supply in question is a Supply Spanning a Change in Rate, the following will apply:
- the old rate (6% GST) shall be charged on the higher of the full/part payment received before 1 June 2018 or the value of the supply of goods (where they are wholly or partly removed or made available before 1 June 2018) or services (where they are wholly or partly performed before 1 June 2018); and
- no GST shall be charged on the difference, if any, between the amount of the entire supply and the amount refeured to in subparagraph (a) above.
- Accordingly, any services rendered (whether in whole or in part) before 1 June 2018 are still subject to 6% GST. Similarly, any goods supplied before 1 June 2018 are still subject to 6% GST.
- “A Supply Spanning a Change in Rate” is defined in section 66(5) of the GST Act (set out below) and this refers to any supply where:
- full payment is received before 1 June 2018 and the goods are wholly removed or made available or the services are wholly performed after 1 June 2018;
- full payment is received after 1 June 2018 and the goods are wholly removed or made available or the services are wholly performed before 1 June 2018;
- full payment is received before 1 June 2018 and the goods are partly removed or made available or the services are partly performed before and after 1 June 2018;
- full payment is received after 1 June 2018 and the goods are partly removed or made available or the services are partly performed before and after 1 June 2018;
- the goods are wholly removed or made available or the services are wholly performed before 1 June 2018 and part payment is received before and after 1 June 2018;
- the goods are wholly removed or made available or the services are wholly performed after 1 June 2018 and part payment is received before and after 1 June 2018;
- part payment is received before 1 June 2018 and part payment is received after 1 June 2018;
- part payment is received before 1 June 2018 and the goods are partly removed or made available or the services are partly performed after 1 June 2018;
- the goods are partly removed or made available or the services are partly performed before 1 June 2018 and part payment is received after 1 June 2018; or
- the goods are partly removed or made available or the services are partly performed before 1 June 2018 and the goods are partly removed or made available or the services are partly performed after 1 June 2018.
