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Do I Need to Register For GST in Malaysia?
Goods and Services Tax (GST) is a multi-stage tax on domestic consumption. For GST is charged on all taxable supplies of goods and services in Malaysia except those specifically exempted. GST is also chargeable on the importation of goods and services into Malaysia.
Who shall register under GST?
Any person who makes a taxable supply for business purposes and the GST exclusive value of the taxable turnover of that supply for a period of 12 months or less exceeds the threshold of RM500,000 is required to be registered for GST.
However, business with taxable turnover of RM500,000 and below, even though not required to be registered, may choose to apply for voluntary registration.
What is a taxable supply?
A taxable supply is a supply with consideration and it includes standard-rated and zero-rated supply. Supply without consideration can also be deemed to be a supply. However, certain taxable supplies are not regarded as supplies for GST purposes. Please refer to the GST Guide on Supply for further clarification on the various types of supply.
How to Compute the Total Taxable Turnover?
Taxable turnover means the total value of taxable supplies for a period of twelve months excluding the amount of GST.
Effective on 01 January 2017, the determination of taxable turnover for GST registration purposes has to include all supplies of goods and services which are taxable, i.e. standard rated supply, zero rated supply, deemed supply as well as disregarded supply. However, the following taxable supplies will not be included:
(a) disposal of capital assets due to cessation of business;
(b) imported services;
(c) supplies made in relation to Warehousing Scheme;
(d) supplies of goods made within or between designated areas;
(e) supplies made by a foreign principal or a recipient under the Approved Toll Manufacturer Scheme; and
(f) supplies of goods made within or between free zone.
The method to use for computing taxable turnover depends on the category of person, e.g. sole-proprietorship, partnership or company.
| Category of Person | Taxable Turnover |
|---|---|
| A company | the value of all taxable supplies made by that company |
| A company with divisions or branches | the value of all taxable supplies from all divisions and branches (We allow branch registration only IF the company itself is already registered, i.e either mandatory registration or voluntary registration. Sec 30 requires the company to fulfill 6 conditions before approval for branch registration is allowed) |
| A sole proprietor/ an individual | the value of all taxable supplies of his business |
| A partnership | the value of all taxable supplies by the partnership |
| A single taxable person | the value of all taxable supplies by the business entities registered as a single taxable person |
| A joint venture | the value of all taxable supplies made by the joint venture |
| A foreign principal | the value of all taxable supplies made in Malaysia by the foreign principal |
The taxable turnover for a period of twelve months can be determined based on either the historical or the future method.
The historical method is based on the value of the taxable supplies in any month plus the value of the taxable supplies for the eleven months immediately before that month. The determination of historical method is explained as in Diagram below.
Historical Method
At the end of May 2016, the value of taxable supplies for the month of May is RM100,000 and the value of taxable supplies for the eleven months backward (i.e. from June 2015 to April 2016) is RM400,200. The total value (annual taxable turnover) of all taxable supplies is RM500,200. The taxable turnover has exceeded the threshold starting from 1 June 2016 and the business is liable to be registered for GST within twenty-eight days from this date, i.e. 1 June 2016. The effective date for GST registration is 1 July 2016 (first day of the following month after the end of the twenty-eight day liability) since the annual taxable turnover has exceeded the threshold limit on 31 May 2016.
For the future method, the taxable turnover is based on the value of taxable supplies in any month plus the expected value of taxable supplies for the eleven months immediately after that month. A business will have reasonable grounds to expect its taxable turnover to exceed the threshold if it has signed a written contract to supply taxable goods or services. The determination of future method is explained as in Diagram below.
Future Method
If at the end of June 2016, the value of taxable supplies for the month of June is RM100,000 and his supplies for the preceding eleven months (i.e. from July 2015 to May 2016) does not reach the threshold, he must look at the expected turnover from July 2016 to May 2017. Since his taxable supplies for the month of June 2016 is RM100,000, if he reasonably expects his turnover for the next eleven months (i.e. from July 2016 to May 2017) to be more than RM400,000, then he is liable to be registered for GST within 28 days from the end of the month of June 2016, i.e. from 1 July 2016 to 28 July 2016. The effective date for GST registration is 1 August 2016 (first day of the following month after the end of the twenty-eight day liability) since the annual taxable turnover has exceeded the threshold limit on 30 June 2016.
When You Liable to Register For GST?
You must apply for GST registration within 28 days from the date the annual taxable turnover exceed RM500,000 (determined based on either the historical or the future method).
The effective date of registration is on the first day of the following month after the end of the twenty-eight days liability.
You have to submit your application for GST registration by the due date to avoid being penalised for late notification of your liability for GST registration
What are the Consequences for Late GST Registration?
A person who is late in applying for registration will be liable to pay a late registration penalty from the date he should have been registered to the date immediately before the date he is so registered, and this period is referred to as the late registration period. Late registration penalty will be imposed according to the following table:
| Late registration period (Days) | Amount of penalty (RM) |
|---|---|
| 1 – 30 | 1,500 |
| 31 – 60 | 3,000 |
| 61 – 90 | 4,500 |
| 91 – 120 | 6,000 |
| 121 – 150 | 7,500 |
| 151 – 180 | 9,000 |
| 181 - 210 | 10,500 |
| 211 - 240 | 12,000 |
| 241 – 270 | 13,500 |
| 271 – 300 | 15,000 |
| 301 - 330 | 16,500 |
| 331 – 360 | 18,000 |
| Exceeding 360 | 20,000 |
A late registrant is required to submit tax return according to the taxable period assigned to him, i.e. monthly or quarterly. The first taxable period will commence from the date he should have been registered.
