New Malaysian Government Fulfils Promise, Malaysia GST Reduced to Zero
The Malaysian government has today thrilled citizens by fulfilling their promise – the Malaysian Goods and Services Tax (GST) will be reduced from 6% to zero come June 1st.
The new Malaysian Prime Minister Mahathir Mohamad had earlier instructed the government to stop collection on GST. This fulfils the major promise that was made by the Pakatan Harapan coalition during the campaign trail that should they win the May 9th general elections, GST would cease to exist.
In a statement issued by the Finance Ministry, all registered traders have been instructed to follow this decision of zero rate on GST starting from now. All registered businesses will also be subjected to the current regulations.
However, the new government would still need to repeal the 2014 GST Act before the consumption tax could be totally removed. Sales and Services Tax will be reintroduced to replace the GST. The Finance Ministry has said that the shortfall in revenue will be supported by specific revenue and expenditure measures which will be announced soon in addition to the reintroduction of the Sales and Services Tax.
When the GST Act 2014 is repealed, you are automatically ceased to be a GST registered person. You are not required to apply for deregistration. However, you are required to submit the final GST return within 120 days fro the Act being repealed.
After 1 September 2018, Custom audits for GST closure purposes would be carried out on GST registered entities.
The Goods & Services Tax (Rate of Tax) (Amendment) Order 2018 will come into operation on 1 June 2018.
Please take note of the followings:
1) The GST Act is not repealed yet, until further notice.
2) You will need to comply with the GST regulations, until further notice.
3) You will need to charge GST at 6% GST standard rate from now to 31 May 2018.
4) From 1 June 2018 onward, the tax rate is 0%.
5) You are still required to issue a tax Invoice for all taxable supply, showing 0% GST from 1 June 2018, until further notice.
6) You will need to submit the GST 03 return form as usual, when it’s due.
7) You will need to pay the net GST payable or claim back the net GST refund upon submitting the GST return.
In between 17 May 2018 to 25 May 2018, the Custom has released a total of 4 FAQ for the GST treatment, but the GST treatment is still subject to changes from time to time.
While awaiting for the GST treatment to be finalised, you may take note of the following steps:
1) For tax invoices issued / payment received before 1 June 2018 BUT services rendered OR goods delivered on/after 01 June 2018, you should continue to reflect 6% GST now. The refund of 6% GST to customers would be via credit note once Custom confirms the GST treatment.
2) You need to prepare to adjust the pricing, from 01 June 2018 onward, for GST registered person, all your price must exclude GST portion. For example, your price tag of RM321 W/GST before 01/06/2018 (6% GST) must change to RM300 W/GST on/after 01/06/2018 (0% GST).
3) Customise your tax Invoice to change the tax rate from 6% to 0%. You may consult your software vendor for any clarification.
You may read the full FAQ from the custom website for more information.