GST requirements in Malaysia: what do you need to look out for?

The Malaysian Goods and Services Tax (GST) was originally due to be implemented in 2011, however, it did not come into effect until 1 April 2015. Now a year in, the Royal Malaysian Customs Department has released related information.

The Malaysian Goods and Services Tax (GST) was originally due to be implemented in 2011, however, it did not come into effect until 1 April 2015. Now a year in, the Royal Malaysian Customs Department (RMCD) has released related information.

The total collection from 1 April to 31 December 2015 was RM27.012 billion, with the estimated collection for the 2016 financial year increasing to RM39 billion.

The GST rate will remain unchanged at 6%, with no plans to alter it. Meanwhile, developments have been announced to help strengthen the GST legislation, promote accuracy in submission and encourage timely payments, including:

  • Penalties associated with late payment of GST
  • Definition of when a taxable person is considered to be holding a tax invoice. 

Penalties

From 1 January 2016 onwards, there will be penalties for organisations with late payment of GST. According to the RMCD, the penalty rate increases with 30 day increments, resulting in the following:

  • A 5% penalty rate for GST that is between 1 and 30 days overdue
  • A 15% penalty rate for GST that is between 31 and 60 days overdue
  • A 25% penalty rate for GST that is over 60 days overdue.

When does 6 Years Rule start?

It is important to understand GST requirements, especially when claiming input tax.

For example, when a taxable individual is considered to hold a tax invoice. This is the earlier of either: the date that the tax invoice was posted into the company’s accounts payable, or a year from the date the individual holds the tax invoice.

If a taxable individual has not claimed back their input tax in the taxable period, the Director General may allow the individual to make a claim within six years from the date of supply to the person in question.

What next?

TMF Group has local knowledge and expertise in complying with Malaysia’s tax system. We can assist with GST registration, the preparation and submission of GST returns through to reviewing of GST filings and customs queries.

Need more information? Get in touch with our experts in Malaysia.

Find out about our Accounting and Tax services worldwide.

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