0% GST in Malaysia:
As many of you are aware, the GST rate for standard-rated supplies of goods and services is reduced from 6% to 0%, effective from 1st June 2018 onwards. So what does this mean to your business?
- Although the GST rate for standard rate supplies is now 0%, this does not mean they are treated as zero-rated supplies. It is wrong to assume that GST has been abolished for all goods and services, they are still in force, at a rate of 0%.
- Registered persons shall continue to be subject to all regulations and obligations currently in force, including issuing tax invoices, submitting GST returns, claiming input tax credits and record-keeping etc.
- Businesses and retail outlets are to ensure the price of goods and services are revised accordingly to the 0% GST rate, in compliance with the Price Control and Anti-Profiteering Act 2011. This means taking active steps to make changes to advertisements and price displays to ensure that the new price from 1st June 2018 onwards no longer include 6% GST.
- Businesses should be aware of the transitional rules with respect to the revocation of the Zero-rated Supplies Order. All zero-rated supplies (ie: goods and services previously listed under the Zero-rated Order 2014) will be treated as standard-rated supplies, which are subject to 0% GST. They will be subjected to the same GST filing obligations and regulations discussed above.
- Review your commercial contracts. If you have contracts previously entered into based on a 6% GST-inclusive price, perhaps you may want to renegotiate the terms to reflect the 0% GST on the consideration payable under the contracts. *During the negotiation process, bear in mind that Sales and Service Tax (SST) will be reintroduced at some point in the future.
Extra Remark:
The Ministry of Finance has confirmed that the Sales and Service tax (“SST”) will be reintroduced in the future, but no tentative timeline has been announced yet. Currently, it is also not known whether the SST will be reintroduced in the same scope and rates as before. Anyway, we will endeavour to keep you updated about the latest development of SST in future posts.
