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

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

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
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)

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)

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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

Net GST Position (wholly taxable entity)
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1,400
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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