ARE YOU SUBJECT TO SALES TAX?

Any person who manufactures taxable goods and the sales value of such taxable goods for a period of 12 months and exceeds the threshold of RM500,000 is liable to be registered under the Sales Tax Act 2018. SST Registration can be done online through the RMCD’s MySST System.

• Are you carrying business?
• Are you a manufacturer of sub contract manufacturer?
• Do you have taxable goods of RM500,000 within 12 months?
• Are you supplying taxable goods?
• Are your exempted person?

SALES TAX REGISTRATION (EXEMPTION FROM REGISTRATION)

• Manufacturers who manufacture taxable goods or sub-contractor doing subcontract work of taxable goods but does not exceed Sale value of taxable goods of RM500,000 as specify in item 1, Schedule A, Sales Tax (Exemption from Registration) Order 2018.
• Manufactures of goods that are not subject to sales tax under Sales Tax (Goods Exempted from Sales Tax) Order 2018.
• Manufactures whose manufacturing operations is any one of those specified in Sales Tax (Exemption from registration) Order 2018.
• Special Areas such as LMW and FZ are not required to register for SST (FAQ, No.2 – Guide on Sales Tax Registration)

GOODS EXEMPTED FROM SALES TAX

• Live animals
• Live plants
• Vegetables
• Fruits
• Waters
• Salt
• Medicines
• Natural Rubber

PERSON EXEMPTED FROM PAYMENT OF TAX

• Schedule A: Class of person, e.g. Ruler of states, federal or state government, local authority, inland clearance deport, duty free shop
• Schedule B: Manufacturer of specific non taxable goods – exemption of tax on the acquisition of raw materials, components, packaging to be used in manufacturing activities.
• Schedule C: Registered Manufacturer – exemption of tax on the acquisition of raw materials, components, packaging to be used in manufacturing of taxable goods (replacing CJ5, CJ5A, CJ5B).

SALES TAX CHARGED

• Sales tax shall be charged and levied on such taxable goods and shall become due on the date such taxable goods are delivered.
• Accounting basis: Accruals basis

SST RETURN SUBMISSION AND PAYMENT

• SST returns are required to be submitted for each taxable period on a bi-monthly basis to RMCD (Royal Malaysian Customs Department).
• SST return has to be submitted no later than the last day of the following month after the taxable period has ended in order to avoid any penalty.
• SST returns shall be furnished to the RMCD by post to the Customs Processing Centre or through electronic service.

SST PENALTIES

Penalties may be imposed if the following offences are committed:

• Any deficiency on the net tax payable
• No SST return is made
• A SST return is submitted without payment or a lesser payment
• Failure to register

Late Payment Penalty:

• 10% – of the amount not paid after the last date of the first 30 days period
• 15% – of the amount not paid after the last date of the second 30 days period.
• 15% – of the amount not paid after the last date of the third 30 days period.

SST CRITICAL ISSUE

• New SST Model and its Application – Professional Service Providers, Manufacturing, Service Industry
• New SST’s Scope of Coverage
• Cashflow Concern
• New SST Return Compliance
• Submission and payment of New SST return
• Penalties and Offences – Late payment and incorrect return submission
• Clearly know what are the penalties and ways to avoid them
• Changes to Document Format – Invoice format, credit note and debit note
• SST Exemption and Relief – Who is entitled? How to get them? When to apply and its foreseeable challenges & array of solutions?
• GST Transitional Concerns
• SST treatment on Reimbursement and Disbursement
• SST treatment on Designated Area (DA) and Special Area (SA)
• Bad Debts Claim and Recovery
• AND MANY MORE.

SERVICE TAX ON IMPORTED SERVICES

To ensure equal treatment for services supplied by both local and foreign service providers, it is proposed that service tax be imposed on taxable services imported into Malaysia. The imposition of service tax on imported services will be carried out in phases as follows:

• Business to Business (B2B) transactions: Malaysian recipient customers to account for 6% service tax via reverse charge from 1 January 2019; and
• Business to Consumer (B2C) transactions: Foreign providers of digital products and services are required to register and collect 6% service tax from 1 January 2020.
• The service tax on imported services shall be due at the earlier of the payment date or date of receipt of invoice.
• Non-registered person acquiring imported taxable services will need to account for service tax in a specific declaration form (SST-02A) not later than the last day of the month following the month the payment was made or the invoice received.
• Registered person acquiring imported taxable services will need to account for the service tax in the bi-monthly SST-02 Form.
• Failing to furnish the declaration as prescribed, or furnishing an incorrect declaration will be subject to the same penalties as a taxable person.

CREDIT SYSTEM FOR DEDUCTION OF SALES TAX

In accordance with the amendment of the Sales Tax Act 2018 with the addition of Section 41A – Deduction Of Sales Tax through the Finance Act 2018, deduction of tax or formerly known as a credit system may be applied by a registered manufacturer with effect from 1 January 2019.