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GST List of Zero-Rated Supply, Exempted Supply and Relief in Malaysia

Are you a new business owner operating in Malaysia? Want to learn more about GST in Malaysia? If yes, then you have come to the right place! Goods & Services Tax, also known as VAT (Value Added Tax) in Malaysia, is levied on all goods and services (even those being imported) at every stage of the business supply chain. However, the good news is that in Malaysia, the GST applied is claimable by registered businesses. Simply put, the tax element doesn’t become a part of the product cost.

In Malaysia, GST largely falls under 4 different categories. These are standard-rated supplies, exempt supplies, zero-rated supplies and supplies that are beyond the scope of Goods & Services Tax. Goods & services that fall under each of these categories are pre-determined by the RCDM (Royal Custom Department of Malaysia). Below is the overview of these GST categories for better understanding:

* The list below is a summary of the official list published in the Federal Government Gazette. You are advised to refer to the relevant Federal Government Gazette for updated and detailed information always.

What is GST Zero-Rated Supply in Malaysia?

As the name suggests, GST zero-rated supply means that the goods and services that fall under this category are not taxed. In other words, they are subject to zero percent tax rate.

Under this category, the taxable company doesn’t need to collect any GST on sales. But the company is most certainly eligible to file a claim for input General and Sales Tax credit on the cost incurred in manufacturing the supplies. Simply stated, GST that is paid on asset, operational cost incurred and purchases for manufacturing goods are claimable as ITC (Input Tax Credit).

Consumers can easily identify zero rated goods by looking at the purchase receipt. Goods and Services that fall under the GST zero-rated supply category include utility and basic food like:

i. Supply of Goods Determined as Zero-Rated

No.

Item

1.

Livestock which includes cattle, buffalo, selembu, seladang, swine, sheep and goat

2.

Fresh and frozen meat, including offal, of livestock

3.

Live poultry and ducks

4.

Fresh and frozen meat, including offal, of poultry and ducks

5.

Chicken and duck eggs, fresh or salted

6.

All kinds of live, fresh, chilled and frozen fish (except for fish for ornamental use)

7.

Other kinds of water creatures, live, fresh, chilled and frozen such as crustaceans (crabs, prawns, shrimps), molluscs (oysters, mussels, cuttlefish, snails) and others such as sea cucumbers and jellyfish

8.

Fish, dried, salted or in brine, including anchovies (except smoked fish)

9.

Vegetables such as tomatoes, onions, cabbages, radishes, cucumber, leguminous vegetables, asparagus, mushrooms, pumpkins, potatoes, fresh, chilled or in brine

10.

Fresh fruits, local or imported

11.

Spices and herbs such as tamarind, dried chillies, black pepper, cinnamon, cloves, nutmeg and ginger

12.

Coconut including grated coconut

13.

Paddy and rice including glutinous rice, basmathi and brown rice

14.

Wheat flour, attar flour, rice flour, sago flour

15.

Lentils

16.

Granulated sugar including castor sugar, course and fine

17.

Salt

18.

Cooking oil from oil palm, coconut and groundnuts.

19.

Shrimp sauce, fish sauce and shrimp paste

20.

Coffee, tea and cocoa powder

21.

Rice vermicelli, rice noodles, yellow noodles, flat rice noodles

22.

White and wholemeal bread

23.

Baby formula age 0 to 36 months

24.

All types of reading materials and newspapers including student workbooks, encyclopedia, story books, novel, recipe books, reference book in all fields, books related to religion, religious texts and newspapers (except magazines and books that are not reading materials such as diaries, notebooks, log book and accounting books such as journals and ledgers)

25.

Medicines in the National Essential Medicines List
Expanded to include 4,215 medicine brands

26.

Goods supplied from mainland Malaysia to Langkawi, Labuan and Tioman

27.

Goods, supplies and spare parts for sea voyages and flights

28.

Treated water for domestic use

29.

Electrical supply for the first 300 units of domestic use

30.

Supply of raw materials and components under the Approved Manufacturers Toll Scheme

ii. Supply of Services Determined as Zero-Rated

No.

Item

1.

Services relating to ships and aircraft at ports and airports

2.

International flights and voyages for passengers and cargo

3.

Insurance services for international flights and voyages for passengers and cargo

4.

The hiring of goods for use outside Malaysia

5.

Services in connection with a land situated outside Malaysia

6.

Contracts with a person who is outside Malaysia

7.

Financial services in connection with the export of goods to a place outside Malaysia

8.

Life insurance contract or family takaful contract relating to risk outside Malaysia

9.

Cultural, sports, educational, training, entertainment and other services performed outside Malaysia

10.

Telecommunication services to parties outside Malaysia

11.

Telecommunication roaming services

12.

Services relating to computer server co-location contracts with foreign parties

13.

Services for advertisements promulgated outside Malaysia

14.

Postal services for international mail

15.

Services supplied by an approved refund agent under the Tourist Refund Scheme

16.

Services relating to inbound or outbound tours by a person who belongs in Malaysia to a person who belongs in a country other than Malaysia when the services are performed.

17.

The lease of air and sea containers

18.

Inwards remittance transactions from overseas to Malaysia and global international remittances hub services

19.

Online newspaper services

Source: P.U. (A) 272 Goods and Services Tax (Zero-Rated Supply) Order 2014

 

What is GST Exempted Supply in Malaysia?

A company or individual registered under the GST exempted supply category is not required to collect any goods and services tax nor is that person or company eligible to claim ITC (Input Tax Credit) on the cost incurred when manufacturing goods and supplies.

Just like the zero-rated supplies, consumers buying tax exempted goods/supplies can easily identify this group of supplies on the receipt. In other words, these goods and services are free from GST.

However, here it is important for companies to understand that securing profit margins would be difficult. In order to improve profits, companies may have to increase the price of their products and services to ensure that the cost of manufacturing is met easily with the price of goods sold.

Here is a look at some of the businesses or services that fall under this category:

i. Supply of Goods Determined as Exempt Supply

No.

Item

1.

Land for residential, agricultural and general purposes (cemeteries, agricultural land and houses of worship)

2.

Residential building

3.

Investment precious metals comprising gold, silver and platinum in stipulated forms and gold, silver and platinum coins as listed

ii. Supply of Services Determined as Exempt Supply

No.

Item

1.

Financial services comprising the following:

    1. Current, fixed or savings accounts;
    2. Loans, advances or credit;
    3. Installment credit finance in a hire-purchase, conditional sale, credit sale or lease agreement;
    4. Note or order for payment;
    5. The exchange of currency;
    6. Ownership or derivative relating to an obligation to pay interest or similar charge;
    7. The holding of bonds, debentures, bank notes or similar instruments representing or evidencing indebtedness, whether secured or otherwise;
    8. The transfer of ownership of any securities or derivatives relating to securities;
    9. The transfer of ownership of futures contract or derivatives relating to commodities except for settlement of any futures contract by way of physical delivery
    10. The issue, holding or redemption of any unit or other similar instruments under a trust fund; and
    11. The provision of any life insurance or life reinsurance.

The services listed above do not include any service relating to the provision of financial products which charge fees and not penalties.

2. Educational services consisting of pre-schools, primary and secondary schools, tertiary education provided by private schools (including private Chinese schools), international schools, state religious schools, public and private institutions of higher education and registered certified centres providing technical and vocational education. Educational service provider must be registered under the related Act or with the Ministry of Education. Educational services exempted from GST include:

  1. course materials;
  2. field trips or group tours;
  3. the provision of food and accommodation;
  4. student transport; and
  5. examination services.

The educational services above do not include tuition classes, training in language, computer, skills, vocation, profession or trade or commerce, mind enrichment and guidance centres.

3. Child care services provided by any child care centre registered under the Child Care Centre Act 1984
4. Healthcare services provided by any private healthcare facilities registered or licensed under the Private Healthcare Facilities and Services Act 1998 including the provision of food and beverage to patients. Services referred to do not include traditional or alternative medicine.
5. The rental or lease of land or building for residential or agricultural or general purposes. Management services by a management corporation or a joint management body for low or medium low strata title housing is exempted from GST.
6. Public transportation (land and water).
7. Highway tolls
8. Funeral, burial and cremation services including pre-funeral program.
9. Maintenance fees and sinking fund for all types of residential buildings that are held under strata ownership

Source: P.U. (A) 271 – Goods and Services Tax (Exempt Supply) Order 2014

 

What is GST Relief in Malaysia?

Goods and Services Tax relief basically refers to the remission of the proportion of tax income which is normally due on income earned.

According to the Goods & Services Tax Relief Order 2014, entities that were granted tax relief from GST payment on goods acquisition include:

i. Persons and Entities Granted Relief From Payment of GST on Acquisition of Goods

No.

Person/Entity

Goods

1.

SPB Yang Dipertuan Agong, Sultan, Raja, Undang and Tuan Yang Terutama All goods excluding petroleum

2.

Federal or State Government Department All goods excluding petroleum and imported motor cars

3.

Public higher educational institution Equipment and materials for educational purposes

4.

Private educational institution for pre-school, primary, secondary, higher education and skills including Maktab Rendah Sains MARA
  1. Multimedia equipment used as a teaching aid
  2. Equipment for science and linguistic laboratory
  3. Tools and equipment for technical of vocational studies
  4. Chemicals, solution and gas for science laboratories

5.

Private hospital Medical equipment

6.

Private charitable body for the disabled Listed equipment

7.

Private charitable body All goods excluding and petroleum and motor vehicles

8.

Any person entering Malaysia and journalists Listed goods

9.

Driver from Labuan and Langkawi Motor vehicles and motorcycles

10.

Importer Goods imported for repairs and subsequently re-exported.

11.

Any public body Goods taken as samples

12.

Any importer using courier services All goods excluding cigarette, tobacco and intoxicating liquor

13.

Embassies and foreign diplomats Goods excluding petroleum

14.

Malaysia-Thailand Joint Authority Goods which are to be fully used in the Joint Development Area

Relief granted from GST on supply of both goods and services include:

No.

Person/Entity

Goods

1.

Any person Supplies made in a fund raising event

2.

Developer or land owner Supply of land by developer or land owner to the government or local authority for the purpose of providing public amenities and utilities such as playgrounds, houses of worship, halls, sewage ponds, water tanks and the like.

3.

Duty free shop All goods supplied at the duty free shop

4.

Any person Goods and services supplied within Joint Development Area

Source: P.U.(A) 273 – Goods and Services Tax (Relief) Order 2014

Kindly remind that you must obtain the “CERTIFICATE UNDER THE GOODS AND SERVICES TAX (RELIEF) ORDER 2014” from the relevant parties and the invoice must indicated the relief is given under which section. (e.g. Relieved from charging GST for supply to a person given relief under Item 3, Schedule A of GST (Relief) Order 2014). Click here for more information about GST Relief.

Contact 3E Accounting Malaysia for assistance about Zero-Rated Supply, Exempted Supply and Relief.