Michaela Merz

Malaysia – introduction of GST on 1 of April 2015 at the rate of 6%

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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:

Zero-rated supplies 

  • 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

Exempt supplies

  • Goods
    o    Land and building used for residential, agricultural, burial and religious purposes.
  •  Services
    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  Toll
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

Steve Chia
Senior Executive Director
Phone  +60(3) 2173 1572

For further details: The 2014 Budget

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