Malaysia Continues to Streamline its Goods and Services Tax

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Malaysia is continuing its streamlining of its Goods and Services tax (GST). Among the recent changes are a revised GST guide on the country’s Warehousing Scheme, a new guide on filing GST-04 returns, and the possibility of expanding the list of goods not subject to GST.

GST is defined as a multi-stage tax payable by all the intermediaries in the production and distribution chain, with the tax burden ultimately borne by the end consumer.  GST is a much broader tax than a sales and service tax; it operates on a negative concept, and all goods and services are therefore subject to GST unless specifically exempted.  Businesses should note that services provided by a foreign service provider to Malaysian entities will also be subject to GST. The Royal Malaysian Customs Department (RMCD) is the agency in charge of administering the GST.

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According to the RMCD’s new guide, the Warehousing Scheme will apply to the importers or the owners of the goods, and will suspend GST on all goods imported and deposited in public licensed warehouses. In another positive move, no application will be required to participate in the scheme. The imported goods will become subject to GST once they are removed from the warehouse. The Customs No. 1 form must be used to declare the GST.

The Malaysian government has imposed the new scheme in order to help improve the cash flow of importers, who previously had to pay GST upon importation of their goods.

Additionally, the RMCD has issued a guide for companies filing their GST-04 returns. In order to facilitate the submission and payment processing of the GST return, companies are encouraged to submit their returns through the Taxpayer Access Point.

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The Malaysian government has also announced that it may expand the number of items that are not subject to the country’s goods and services tax (GST). According to Deputy Finance Minister Datuk Ahmad Maslan, the budget committee is currently analyzing the economic impacts of expanding the list. As of now, around 900 items are exempt from GST, these include bread, coffee, tea, fruits, essential services, and certain types of fuel. Future items that may be included in the list include prayer items and quails.

Malaysia’s efforts at streamlining its GST processes have met with clear success. According to the country’s Consumer Complaints Centre at the Domestic Trade, Cooperatives and Consumerism Ministry, there has been a 90 percent decline in the number of GST related complaints from its April start date.


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