GST at 0% from June 1 2018

The Goods and Services Tax (GST) will be zero-rated for all items and services in Malaysia from June 1, the Finance Ministry announced on 16th May 2018.

The ministry said the GST will no longer be imposed at a rate of 6 per cent from then on, adding that this will be subject to further notice.

Accordingly, all registered merchants must comply with the imposition of the zero rate.

At the same time, registered traders are still subject to all current regulations set forth in respect of the issuance of tax invoices, tax returns within the prescribed periods of charge and input tax credit claims.

“Traders also need to ensure the price of goods and services that are set to comply with the Price Control and Anti-Profiteering Act 2011 at all times,” the statement said.

The impact on business

This is a transitional period.

Although GST is rated at 0%, it is still in force until the proposed Sales and Services Tax (SST) is implemented.

The process of introducing and implementing SST will take time as it has to go through the process of being debated and passed in Parliament.

Until such time, when GST is replaced with SST, or repealed, GST remains in effect, and all registered persons will have to comply with the regulations.

New businesses who hit the threshold of RM500,000 are still required to register for GST, and existing businesses will still have to comply with the process of recording transactions and reporting.

What you should do?

To comply with the impending change in GST rate, you should:

  • Ensure that you record all invoices for goods and/or services supplied on or before 31st May 2018 with the appropriate GST tax codes and rates.
  • Ensure that you record all invoices from GST registered suppliers for goods and/or services received in May 2018 with the appropriate GST tax codes and rates.
  • Record all credit and/or debit notes similarly with the appropriate GST tax codes and rates.
  • Avoid receiving or paying deposits for supplies to be made on or after 1st June 2018 in May.

Moving forward, due to the change in rate, you should also:

  • Review contracts for the supply or acquisition of goods and/or services that include GST but the supply of which will be wholly or partially be made after 31st May 2018.
  • Review budgets and make the necessary changes

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