What is GST

The Malaysian GST regime: same same, but different

To modernise its taxation system and improve business efficiency, Malaysia replaced its Sales and Service Tax regimes with the Goods and Services Tax (GST) effective 1 April 2015. 

The Malaysian GST system 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

But 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

How we can help

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 GST reaches across every aspect of business, there will be GST implications arising from new acquisitions, new arrangements, contracts and new business expansion plans.

Our team of experienced tax consultants are 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.

Learn more about our dedicated GST solutions.

Contact us

Raja Kumaran

Tax Director, Indirect Tax, PwC Malaysia

Tel: +60 (3) 2173 1701

Follow us