The Malaysian Prime Minister has announced that GST will be implemented in Malaysia on 1 April 2015 at the rate of 6% in his budget speech. The threshold for mandatory registration will be RM 500,000.
Income Tax rate will be reduced between 1 % to 3 %, effective from assessment year 2015. Corporate Tax rate will be reduced by 1% from 25% to 24% (SME rate from 20% to 19%) effective from assessment year 2016.
The Government has also provided with a comprehensive list of zero rated and exempt supplies which includes:
- Food items – Live animals, animal products, vegetable products and some prepared food. The products that will be zero rated will be classified under the Customs tariff codes. The list also includes a significant number of items covered under the Control Supplies Act 1961.
- Other goods
o Goods supplied to Labuan, Langkawi and Tioman
o Goods supplied in connection with international shipping and air services
o Supply of treated water (unlimited) to domestic consumers
o First 200 units of electricity to domestic household
o Supply of raw materials and components for approved toll manufacturing scheme
- Services – Zero rated services will include:
o Services and spare parts in connection with shipping and aircraft (excluding private use)
o International transportation of passenger and goods
o Leasing of goods outside of Malaysia
o Services rendered in connection with goods or land outside Malaysia
o Services rendered to a person outside Malaysia
o Specified services provided in Malaysia to a person (in his business capacity) who belongs outside Malaysia
o Insurance relating to export of goods; services connected with the export of goods; Insurance of risk outside Malaysia
o Telecommunication services provided to outside Malaysia
o Services supplied relating to location of computer servers in Malaysia belonging to a person outside Malaysia
o Advertising services made available outside Malaysia
o International mail
o Qualifying inbound/outbound tour services
o Lease of air or sea containers
o Land and building used for residential, agricultural, burial and religious purposes.
o Financial services:
- The operation of any current, deposit or savings account.
- The provision of any loan, advance or credit or other similar facility.
- The transfer of derivatives/securities
- Unit trust transactions
- Life insurance
- Islamic financial services will be given the same treatment as conventional financial services
*It is to be noted that any fee, commission, or similar charges associated with the above services will be treated as a taxable supply.
o Education services
o Childcare services
o Healthcare services
o Rental of residential properties and accommodation (more than 28 days)
o Public transport
o Funeral, burial, and cremation services
o Qualifying supplies by societies and associations
Any question on Malaysian GST can be referred to the following person:
Wan Heng Choon
Senior Executive Director
Phone +60(3) 2173 1488
Senior Executive Director
Phone +60(3) 2173 1572
For further details: The 2014 Budget