What is GST

The Malaysian GST regime: same same, but different

With the view of modernising its taxation system and improving business efficiency, Malaysia replaced its Sales and Service Tax regimes with GST effective 1 April 2015.

Malaysia has two rates of GST (6% and 0%), and provides for the zero-rating of exported goods, international services, basic food items, and many books.

The following supplies are generally GST exempt:

  • residential property
  • financial services
  • childcare and private education services
  • healthcare services
  • public transport services

While the Malaysian GST regime has similarities to the Singaporean GST regime and draws input from the Australian, UK, New Zealand and South African GST/VAT rules, there are a number of unique schemes and “quirks” which multinational businesses operating in Malaysia should take note of, including the following:

  • Designated Areas, where supplies made within these areas will be disregarded for GST purposes
  • Approved Toll Manufacturer Scheme, where certain manufacturers can qualify to have import GST suspended
  • Reverse charge mechanism extends to also apply to fully taxable persons, and non-registered parties who consume imported services for business use
  • Warehousing Scheme: there are specific rules which allow for the supply and transfer of goods between licensed warehouses to not be subject to GST
  • Deemed Input Tax Credit (DITC) scheme: the supply of non-life insurance is taxable in Malaysia; however the rules allow providers of non-life insurance with a deemed input tax credit with respect to claim settlements
  • Mandatory issuance of tax invoices with respect to standard-rated supplies

Since the announcement in the 2014 budget, businesses operating in Malaysia have undergone an extensive implementation process, requiring a re-look at many pre-existing business practices, as well as updating their systems, processes and policies in order to be GST compliant.

As with any new tax system, there will be many updates and developments, and businesses should be looking to review and refine the implementation work undertaken in the lead up to 1 April 2015.

How can we help

GST implementation is just the first step in being GST compliant. There will be numerous updates and developments with the new tax regime, and it will be important to stay abreast of these new developments to ensure your business remains GST optimised.

As GST reaches across every aspect of business, there will be GST implications arising from new acquisitions, new arrangements, contracts and new business expansion plans. PwC is here to help you identify and work through these GST implications, to give you peace of mind that your business’ future plans are GST optimised.

Find out more about our dedicated GST offerings here.


Related links

  1. Learn more about Global VAT Online
  2. Explore A Guide to VAT/GST in Asia Pacific 2015
  3. Subscribe to our GST Pulse newsletter