GST SEMINAR FOR

AUTOMOTIVE INDUSTRIES
2014

SPECIAL SCHEMES
KHILMIE BIN GHAZALI
Unit Khas GST, JKDM, Putrajaya.
Venue : Grand Bluewave, Shah Alam.
Date : 25 March 2014
PEJABAT PELAKSANAAN GST
KEMENTERIAN KEWANGAN

APPROVED TRADER SCHEME (ATS)

APPROVED TRADER SCHEME (ATS)

Approved Trader Scheme (ATS)

Sec. 71 (1)-(2)

DG is allowed to suspend the payment of tax

chargeable on goods imported by any taxable person
Approved person who is granted approval for ATS is
allowed to suspend GST on the importation of goods
GST due on all goods imported in a particular month
would be accounted for in that month (the month
where importations take place)

APPROVED TRADER SCHEME (ATS)

ATS - Concept
Overseas
person

1. Approved person under

ATS imports goods

Malaysia

GST-03

Amount of GST
Suspended

ATS

3. Approved person
declares the total
amount of GST
suspended in a
taxable period

Approved
person

declaration
. Makes
on imported goods
Customs no.1

GST is
suspended
4

APPROVED TRADER SCHEME (ATS)

ATS - Concept
Malaysia
AA Pte Ltd

ATS approval

XX Sdn Bhd
GST-03 (December
20XX)

Total value of goods

imported under ATS
= RM100,000
Total value of GST
suspended= RM6000

Port (December 20XX)

Value of imported
Goods (CIF + Duty
Import )= RM100000
GST 6%= RM6000

overseas

Customs no.1

GST is
suspended
5

APPROVED TRADER SCHEME (ATS)

Persons eligible for ATS:
Companies located within Free Industrial Zone (FIZ)
Licensed Manufacturing Warehouse (LMW)
International Procurement Centre (IPC)
Regional Distribution Centre (RDC)
Toll manufacturers under ATMS
Jewellery manufacturers under AJS
Companies with turnover above RM25 million and at least
80% of their supplies made are zero-rated
Any other person approved by the Minister
6

APPROVED TRADER SCHEME (ATS)

Approval subject to the following criteria:

Must be registered under Sec. 20 of the GST Act 20XX

Participant must make wholly taxable supply
Must be a registered user of electronic service
Must submit monthly GST return
Must makes declaration on the importation of goods
electronically
Must have good compliance record as a GST payer
Must have good accounting and internal control system
Must furnish security if required; and
Any other conditions as may be determined by DG
7

APPROVED TRADER SCHEME (ATS)

Goods Not Eligible under ATS -

Liquor, beer, wine and spirits

Tobacco and tobacco products
Any goods to which input tax credit is disallowed
(blocked input tax)
Goods for personal use and non-business use

APPROVED TRADER SCHEME (ATS)

ATS Group Registration

A company registered under group registration is allowed

to apply for this scheme
Representative member responsible to declare the
amount of tax suspended in GST return
Goods imported under ATS must be used for business

Imported goods cannot be sold or distribute among other

members
9

APPROVED TRADER SCHEME (ATS)

Administratively the RMC will monitor the approval
Application can be made in a Special Scheme Form
Status of the applicants
Sales turnover and the details of zero-rated supplies per annum
Approval would be given for a period of 2 years
Approval subject to renewal and notices would be sent 2 months before
expiry date. Second notice will be issued 14 days before expiry date

The approval of this scheme will be revoked by DG if

provided false, misleading or inaccurate declaration
ceased to satisfy any eligibility requirements
failed to comply any conditions imposed
applied to deregister by the approved person
10

APPROVED TOLL MANUFACTURER

SCHEME (ATMS)

11

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Approved Toll Manufacturer Scheme

Sec. 72(1)-(8)

Any taxable person (TM) are allowed to disregard the

supply of goods (processed goods) and the supply of
services for and to his overseas principal (who is
belongs in a country other than Malaysia)
Any person (belongs in Malaysia) who receives the
processed goods from the TM shall account and pay
tax as if he had himself supply the goods and acquired
the goods in the course of furtherance his business

12

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

ATMS - concept

Overseas
Principal

3.

Overseas principal
invoices local customer
on finished goods
received

1.TM imports

consigned goods
from the overseas
principal (ATS)

4.

TM invoices overseas
principal for valueadded services
(disregard)

Malaysia

Toll Manufacturer

Local Customer
Recipient accounting

2.

TM drop-ships finished
goods to local customer
of overseas principal

Local supplier deliver

goods on behalf of OP (ZR)

Local supplier
13

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Eligibility for approved under the ATMS
Any toll manufacturer (a taxable person) who has contract(s) with
overseas principal (not a taxable person)
He carried out value added activities with the overseas principal:
worth RM2 million or more (excluding the cost of raw
materials supplied or belonging to the overseas principal) per
annum; and
80% of the processed goods must be exported;
What types of value added activities are allowed under ATMS?
related to manufacturing, treatment, processing, finishing,
assembling and other manufacturing-related works on consigned
goods
14

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Eligibility to apply for ATMS
Approval under ATMS subject to:
The taxable supplies made by overseas principal other than toll manufacturing
activities are below the threshold

Upon
Expected
Application drop shipment
of ATMS
under toll
(principal) manufacturing
per annum

P1

RM 300,000.00

Other
Total
taxable
Turnover
supplies
for
In Malaysia registration
per annum
(exclude
supplies
under TM)
0

Liability for
registration

Eligibility for
ATMS

No

Yes

P2

RM300,000.00

RM100,000

RM100,000

No

Yes

P3

RM600,000.00

No

Yes

P4

RM400,000.00

RM200,000

RM200,000

No

Yes

P5

RM400,000.00

RM500,001

RM500,001

Yes

No
15

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Eligibility under Approved Toll Manufacturer Scheme

Eligibility of approval under ATMS depends on the status of overseas principal

If taxable supplies made by overseas principal other than the supplies made under ATMS
exceeded the threshold, he is liable to be registered
Not eligible for ATMS

Approval
under
ATMS

Years

Drop shipment
under ATMS

Other taxable
supplies in
Malaysia

Liability for
registration

Eligible of ATMS

ATMS P1

Year 1

RM300,000

No

Yes

Year 2

RM500,000

No

Yes

Year 3

RM700,000

No

Yes

Year 1

RM300,000

No

Yes

Year 2

RM500,000

RM200,000

No

Yes

Year 3

RM700,000

RM600,000

Yes

No longer eligible for

ATMS

ATMS P2

16

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

ATMS Time of Supply

Accounting of GST under ATMS

The supply is made by overseas principal
Local customer (registered person & non-registered person ) will
account for output tax on the processed goods received by way
of Recipient Accounting
Registered person GST return (GST-03)
Non-Registered person prescribed form (GST-04)

Time of supply to account for GST under ATMS

The tax on the supply of the treated or processed goods
received need to be accounted for based on the following
(whichever is earlier):
(a) When a payment in respect of the supply is made; or
(b) When the recipient receives an invoice from overseas
principal relating to the supply

17

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Example: Recipient Accounting
Toll Manufacturer (A) delivers processed goods on behalf of overseas principal to the

local customer (B) on 30 April 2015

Overseas principal issued an invoice to local Customer (B) with the amount of
RM200,000.00 on 5 May 2015
If the local customer is a registered person, he has to account GST amounting
RM12,000 (6%XRM200,000.00)

If Local customer not registered under GST?

GST Return - May 2015(GST-03)

OUTPUT TAX =

RM12,000

INPUT TAX

RM12,000

Net Tax

0
18

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

ATMS - Recipient Accounting

If local customer is not a registered person
he has to account GST amounting RM12,000.00
(RM200,000 X 6%) in a prescribed form (GST-04)
he is not eligible to claim the tax paid as input tax credit
the GST needs to be accounted not later than the last day of the
subsequent month from the month in which the supply is made
Prescribed Form
GST No.4 (May 2015)
Value of supply

GST amount payable

RM200,000.00

RM12,000.00

19

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Approval subject to the following criteria:
Must be registered under Sec. 20 of the GST Act
Must be a registered user of electronic service
Must submit monthly GST return
Must have good compliance record as a GST payer
Must have good accounting and internal control system
Must furnish security if required; and
Any other conditions as may be determined by DG
20

APPROVED TOLL MANUFACTURER SCHEME (ATMS)

Administratively the RMC will monitor the approval
Application can be made in a Special Scheme Form
Details of the Toll Manufacturer
Details of overseas principals and the contracts
Details of the local customers
Approval would be given for a period of 2 years
Approval subject to renewal and notices would be sent 2 months before expiry
date. Second notice will be issued 14 days before expiry date
The approval of this scheme will be revoked by DG if
provided false, misleading or inaccurate declaration
ceased to satisfy any eligibility requirements
failed to comply any conditions imposed
applied to deregister by the approved person

21

WAREHOUSING SCHEME (WS)

22

WAREHOUSING SCHEME (WS)

Under WS
Importer/owner of the imported goods is allowed to
suspend the payment of GST at the time of
importation on goods imported and deposited in a
warehouse.
The imported goods will be subject to GST when it
triggers the duty point that is the time when such
imported goods are taken out from the warehouse.
The value of the imported goods is its customs value.

23

WAREHOUSING SCHEME (WS)

WS - GST Treatment
GST on goods deposited into the warehouse to be suspended
GST on goods moved from one warehouse to another warehouse to
be suspended
Intermediate supplies within a warehouse to be disregarded
The last supply is subject to GST (trigger the duty point)
Goods released to local market to be subjected to GST
Goods released to overseas market to be zero- rated
All goods and services consumed in warehouse to be standard-rated
24

WAREHOUSING SCHEME (WS)

Imported

GST on goods deposited

suspended
Supplies within
warehouses disregarded

Warehouse 1

Warehouse 2
GST on supplies
received suspended
Supplies within
warehouses
disregarded

GST on supplies received

suspended
GST on supplies release
from warehouse will trigger
the duty point

Warehouse 3

goods and services consumed in warehouse are standard rated

Goods released to local
Markets to be subjected
to GST
Goods released to
overseas Markets to be
zero- rated

25

WAREHOUSING SCHEME (WS)

Type of warehouses

Type of warehouses license under Customs Act 1967:

Customs warehouse
Licensed warehouse
Duty free shops
Inland clearance depot

Determining the value and calculating GST:

The value of the last supply shall be treated as including

any duties (whether customs duty or excise duty or both,
if any)
The tax on the supply shall be payable at the duty point,
together with the duty (if any).
26

WAREHOUSING
SCHEME (WS)
Warehousing
Scheme

The last supply => the supply which is to be taken out from a
warehouse, i.e. the supply that triggers the duty point
Duty point => the time when the goods are removed from the
warehousing scheme

WAREHOUSING SCHEME (WS)

Example
Daim Sdn Bhd keeps his imported goods in a warehouse
approved under section 65 of the Customs Act. One of his
customers has agreed to buy certain goods at RM10, 000.00
and the goods are to be taken out from the warehouse. How
does his customer determine the value of the last supply?
(Prevailing import duty rate = 10% and GST = 6%)

28

WAREHOUSING SCHEME (WS)

Value of supply
Rate of import duty
Total duty import payable

= RM 10,000.00
= 10%
= RM1000.00 (10%X RM10,000.00)

Daim Sdn Bhds customer needs to declare the following amount:

Value for customs purposes
Import duty (10%)
Total value for calculating GST

= RM 10,000.00
= RM 1,000.00
= RM 11,000.00

GST Payable (6% x RM11,000)

= RM

660.00

29

MARGIN SCHEME (ATMS)

30

MARGIN SCHEME (MS)

Normal rule - GST is chargeable on the full value of
goods sold.
Margin Scheme
Margin scheme allows GST on margin
avoids double taxation as second-hand goods re-enter
the economic cycle.
31

MARGIN SCHEME (MS)

Eligibility
A taxable person - who is in the business of buying
and selling second-hand motor vehicles.

approval given by the Royal Malaysian Customs

Department (RMCD)

For GST purposes, used motor vehicle is any used

motor vehicle which has been registered with the Road
Transport Department in Malaysia.

32

MARGIN SCHEME (MS)

Under the Margin Scheme
there is no input tax to be claimed on the purchase
(input tax not claimable)
A registered person who does not wish to use the
margin scheme for eligible goods must account for
GST in the normal way.

33

MARGIN SCHEME (MS)

GOODS QUALIFYING UNDER THE MARGIN SCHEME
The scheme is applicable for
used motor vehicles (includes vehicles which were
initially subject to sales tax before GST comes into
force)

Goods which were not subject to sales tax before

GST era can qualify under this scheme if the first
sale takes place within GST era. Examples of goods
that fall under this category are motorcycles with
certain c.c. and tractors
34

MARGIN SCHEME (MS)

CONDITIONS IMPOSED UNDER THE SCHEME
Any person may apply for this scheme subject to the
following conditions:
(a) must be a GST registered person.

(b) the goods must be previously purchased from an

individual or a non-GST dealer (no GST was
incurred on the purchase); or the goods were
previously bought from a GST MS registered person
who uses the Margin Scheme; or input tax blocked
goods purchased from GST registered person.
35

MARGIN SCHEME (MS)

CONDITIONS IMPOSED UNDER THE SCHEME
(c) the goods purchased and sold under the margin
scheme must be substantially the same goods.
However, repair, alterations, refurbishment and
renovations which do not affect the nature and the
essential character of the goods are allowed.
(d) no tax invoice to be issued by the approved person
(supplier) under this scheme and hence no input tax
to be claimed by the purchaser. He must meet the
record keeping requirements of the scheme
36

MARGIN SCHEME (MS)

The stock book or similar records that need to be maintained and
kept is as follows:
(a) Purchase details

(i)

stock book number;

(ii) date of transaction;

(iii) purchase invoice number;

(iv) sellers name and address;
(v) vehicle registration, engine and chassis numbers;
(vi) model and make;
(vii) total purchase price.
37

MARGIN SCHEME (MS)

(b) Sales details
(i) date of sale;
(ii) sales invoice number;
(iii) buyers name and address;
(iv) total sale price;
(v) vehicle registration, engine and chassis numbers;

(vi) model and make.

38

MARGIN SCHEME (MS)

(c) Accounting details
(i) purchase price;

(ii) selling price;

(iii) margin in sale;
(iv) tax rate on the date of the sale;
(v) GST due.

39

MARGIN SCHEME (MS)

Scenario 1
Down payment > Margin

Scenario 2
Down payment < Margin

Selling Price

RM50,000
(inclusive of GST)

RM50,000
(inclusive of GST)

Down payment

RM10,000

RM10,000

Loan

RM40,000

RM40,000

Cost Price to dealer

RM45,000

RM35,000

Margin

RM(50,000 45,000)
= RM5,000.00

RM(50,000 35,000)
= RM15,000.00

GST chargeable
on the sale

6/106 x RM5,000
= RM283.00

6/106 x RM15,000
= RM849.05

GST on
down payment

6/106 x RM10,000
= RM566.03

6/106 x RM10,000
= RM566.03

GST to be
accounted

RM283.00
This amount will be
accounted wholly from
down payment as GST
chargeable on the sale is
limited to RM283.00 only.

RM849.05
This amount will be
accounted partly from
down payment
(RM566.03) and partly
from loan (RM283.02)

40

DESIGNATED AREA (DA)

41

DESIGNATED AREA

What is DA?

PART XIV of the GST Act

Refers to Labuan, Langkawi and Tioman

For the purpose of this Part, Malaysia excludes

the designated areas.

(Sections 161-167)

DESIGNATED AREA
Designated area refers to Free Ports ( Langkawi, Labuan and Tioman)

Supply
DA to DA :
Goods and
services
within the DA:
Goods and
services
World to DA:
Goods and
Services
DA to World:
Goods and services
*

GST Treatment
*No GST chargeable

*No GST Chargeable

*No GST chargeable

Zero Rated

Except for petroleum and other goods as prescribed by the Minister

of Finance

DESIGNATED AREA

Supply

GST Treatment

PCA to DA:
Goods
Services

*Zero-rated
Standard rated

DA to PCA:
Goods
Services

Standard rated
Standard rated

Except for petroleum and other goods as prescribed by the Minister

of Finance

OTHER TRANSACTIONS

Gifts
Samples
Warranty
Disposal of assets
Goods lost/destroyed

45

OTHER TRANSACTIONS
Gift
Gift of goods not more than RM500 made in the course or
furtherance of business to the same person in the same
year :
not subject to GST
Samples
Imported trade sample given relief under GST Relief
Order
Trade samples given for promotion not subject to GST
on conditions
packed differently and labelled sample or not for
sale
samples not packed differently is subject to
business gift rules of RM500
46

OTHER TRANSACTIONS
WARRANTY

Manufacturers warranty normally includes:

aftersale services and repairs -not
subject to GST
any replacement of spare-parts free of
charge during the warranty period -not
subject to GST
47

OTHER TRANSACTIONS
Disposal of Assets
Sale of capital assets, other than TOGC
subject to GST
Sale of assets as TOGC
not subject to GST (not a supply)
Given free
the value will be the open market value
subject to GST (>RM500)
Sell as scrap
the value will be the sale value of scrap
subject to GST
48

OTHER TRANSACTIONS
Goods Lost / Destroyed
Imported goods lost while under customs control
subject to GST
may apply for remission from the DG
Goods lost while not under customs control
if the incident happened before sales took place and proven with
supporting document (such as police report, insurance claim etc)
no GST
if unable to prove with relevant documents, Customs has the
power to assess and collect GST
Goods lost during delivery
if supply has not taken place - no GST
if supply has taken place (goods made available) - subject to
GST

49

BUSINESSES PREPARATION

50

BUSINESSES PREPARATION
GST Implication on Prices
identify existing suppliers
talk to small suppliers to get them registered
review procurement policy to avoid tax cascading
negotiate prices with suppliers to pass on savings

review sales price

pass on savings

absorption of GST
Price Control and Anti Profiteering Act 2011
51

BUSINESSES PREPARATION
GST Implication on Stock Management
special refund
physical stock take on hand
documents to support refund
audit certificate

52

BUSINESSES PREPARATION
GST Implication on Cash Flow
need to analyse cash flow impact

cash recover from customer before GST is due

assess the need to provide for one time fund to cater
for GST payment upfront
review credit terms to customers

review requirement to apply for special schemes

53

BUSINESSES PREPARATION
GST Implication on Bad Debts
ensure a proper matching of GST payment to
government and payment received from
customers
monitor payment from customers
understand evidence of reasonable efforts

54

BUSINESSES PREPARATION
GST Implication on Invoicing
identify whether standard rate, exempt, zero rate or
out of scope supply
issuance of full and simplified tax invoice

requirement not to issue tax invoice for imported

services and second hand goods under margin
scheme
21 days rule
self billed invoice
55

BUSINESSES PREPARATION
GST Implication on Output Tax
gifts > RM500 subject to GST

commercial samples in a form not ordinarily

available for sale to the public not subject to GST
deemed supply eg, private use and disposal of
business assets subject to GST
supplies to connected persons

56

BUSINESSES PREPARATION
GST Implication on Input Tax
blocked inputs not claimable
incidental financial supplies

claim > RM500 to be supported by full tax invoice

De Minimis rule

57

BUSINESSES PREPARATION
GST Implication on Contracts
avoid long term contract without legal review
absorption of GST

pricing strategy to pass on savings

GST Implication on Human Resource

enhance staff understanding of GST
avoid unnecessary mistakes

false information may open to audit case

review policy on employee benefits
58

BUSINESSES PREPARATION
GST Implication on System
review system and processes
perform complete mapping of transactions to identify
required changes
GST liability on every transaction
use of online submissions to the Customs
computerised system
ready made software
upgrading present system
59

GST FORMS
GAZETTED FORMS
FORMS NO.

TITLE

GST-01

Application for Goods and Services Tax Registration

GST-02

Application for group / Joint ventures registration

GST-02A

Group member or venturer registration

GST-02B

Notice of Change of representative member or venture operator

and removal of group member or venturer

GST-03

Goods and Services Tax Return

GST-04

Goods and Services Tax Declaration for non-registrant

GST-04A

AUCTION OR SALE IN SATISFACTION OF DEBT DETAILS FOR

GST REGISTERED PRINCIPAL

60

Thank You
End of Presentation
Royal Malaysian Customs
(gst.customs.gov.my)
GST Unit