Planning for GST Malaysia with MYOB Accounting Software
What, Why and How to plan for GST Malaysia.
Key Facts about GST Malaysia.
Why you need to plan for GST.
How can MYOB help you meet your GST obligations
Key Facts about GST Malaysia
- GST will be implemented from April 1, 2015
- GST will replace Sales Tax and Service Tax
- GST will be imposed on all Goods and Services supplied in the country or imported
- The GST Standard Rate will be 6%, payable upon consumption..
- Basic goods and necessities will be charged GST at 0% (zero rated items)
- There are other items which are exempted from GST.
- Supplies made by the Federal and State Government departments are not included in the scope of GST except for services determined by Minister of Finance
- Supplies related to regulatory activities and enforcement by local authorities and statutory bodies are not included in the scope of GST
- GST is imposed on all goods and services at all stages of production, manufacturing, wholesale and retail activities
- The tax that is imposed on all business inputs such as raw materials and capital assets is called Input Tax
- The GST that is charged on all supplies (sales) is called Output Tax.
- GST Registered business can fully claim the deduction for the Input tax that they pay upon consumption.
- The input tax is fully claimable from the Government by a mechanism called input tax credits (which is an offset against the output tax collected, before remitting the net balance)
- Mandatory registration for companies with turnover of more than Rm500,000 per year.
- Voluntary registration allowed for companies whose turnover is less than Rm500,000 per year.
- GST registration opened in June 2014
- Last date to register for GST is December 31, 2014
- GST is not a tax on the business. Instead, GST is a tax on the consumer who consumes goods and services supplied by the registered business.
GST Malaysia eVoucher
Qualifying SMEs can apply for financial assistance of RM1,000 per company to subsidise the purchase or upgrade to GST compliant accounting software.
"This is an initiative to assist the businesses during the GST transition period to ensure smooth implementation of GST. The total financial assistance amounts to RM150 million will be provided in 2014 and 2015”
Prime Minister of Malaysia
2014 Budget Speech, 25 October 2013
How to qualify for the eVoucher
- Meet the new definition of Malaysian SMEs
- At least 51% Malaysian equity
- Must have already registered for GST
The SME Corp has issued a Guideline for New Definition of SME. With effect form ocotner 2013, SMEs are defined into 3 categories
Why you need to plan for GST for your business
- GST will be a new tax in Malaysia, and the administration is different from Sales Tax or Services Tax.
- For most Malaysians, it will be the first time they have to transact in a GST environment.
- Mistakes are bound to happen due to ignorance on the GST regulations, and limited resources to administer the GST collection and payment process
- Strict penalties if you submit incorrect GST amounts
- Although GST is not a business cost, the amount of GST to collect is based on the sales value. The amount of GST paid is calculated based on Purchase of raw Material and Capital assets, and other business expenses.
- Proper record keeping is important for accurate tax declarations
- The more transactions your business generates, the more difficult it is to keep track of all transactions manually
- It is very important to invest in a computerised accounting software or upgrade your accounting software to be able to capture the transaction records accurately and on a timely basis
- GST affects every business, whether or not you are compulsorily required to register for GST. You have to select the right type of software for manage GST more efficiently.
Here are a few things you need to plan for the period before, and after GST implementation :
From now to April 2015
- Understand scope of GST and your obligations
- When should you register your business for GST
- What documentation is required to register for GST
- Set up internal systems and processes to monitor GST collection and payment
- Maintain proper accounting records to fulfill tax obligations, claiming tax credits and tax audit requirements
- Understand GST transition issues
- Arrange for stock take if a stock take is required,
After April 2015
- Submit regular GST returns either monthly (turnover > Rm 5million) or quarterly (turnover < RM 5 million )
- Retention of documents
- Review the GST 03 forms before submission to ensure its accuracy and completeness.
- Educate yourself and your team on GST requirements and exemptions e.g. business expenses, tax invoices, zero rated items
- Contingency plans & resources to manage a potential tax audit process
Responsibilities and obligations as a registered GST supplier
As a registered GST supplier, you will have to
- account for GST collected on taxable supplies made and collected
- submit GST return and pay tax by due date
- issue tax invoice on taxable supply made
- keep adequate records of business transactions relating to GST
General Guidelines for GST ready accounting software
A GST compliant software should provide the following information:
- provide issuance of Tax Invoice as well as Debit Note and Credit Note in compliance with GST legislation.
- provide a reporting facility to generate information necessary to prepare tax returns
- provide comprehensive documentation to assist auditors and users to understand how the system operates
- incorporate adequate internal controls to ensure reliability of data being processed
- create adequate audit trails to assist auditors to understand the flow of events and reconstruct the events, if necessary
- has in place mechanism to archive and restore the archived data, to ensure the integrity and readibility of electronic records after an extended period.
- contains key data elements necessary for business
- allow the production of GST audit file (GAF) by non-specialists staff who do not have an IT background