Imported
services
Under the GST Act, “imported services” means services that are
made by a supplier who belongs in a country other than Malaysia or
who carries on business outside Malaysia to a recipient who belongs
to Malaysia and such services are consumed in Malaysia. In short, any
service consumed in Malaysia and are for the business purposes is
recognise as imported services and shall be
liable for GST for the portion of the services consume in Malaysia.
There are few examples extracted from the “general guide on GST”
by Royal Malaysian Customs;
Example 12:
MY Co. is the
computer database centre for ASEAN region where Kuala Lumpur is the
head office. An overseas consultant (UK Co.) was engaged to upgrade
MY Co.’s database. The consultation cost of RM 80,000 covers all
five regional offices of MY Co. The cost of upgrading MY Co.’s
database in
Malaysia is RM30,000
and is liable to GST while the remaining RM50,000 is not liable
because the work is done for the other regional offices, that is,
consumed outside Malaysia although payment is made by MY Co. based in
Malaysia.
Example
13:
Stylo Bhd. is a
wholesaler for ‘X brand’ shoes in Malaysia and Thailand. Stylo
Bhd. pays royalty to Italy Shoes Co. (holder of rights) at the end of
every year. The royalty paid depends on the total amount of shoes
sold in the year. Stylo Bhd. paid RM36,000 this year for shoes sold
in both countries, which is
RM16,000 for the
sale in Malaysia and RM20,000 in Thailand. The amount of imported
services liable to GST is RM16,000.
Example
14:
KL Co. engaged a few
experts from Europe for a consultation on productivity management for
a factory located in Cambodia. The job was performed in Cambodia but
payment was made by the KL Co. in Kuala Lumpur. No GST is charged on
the consultation services because these services were consumed
outside Malaysia .
Reverse
Charge
A supplier who does not belong in Malaysia and supplies services to a
customer in Malaysia does not have to charge GST. However, the
customer who receives the services for the purpose of any business
carried on by him is required to account for GST by a reverse charge
mechanism.
In short, the customer who receives the services in Malaysia for the
purpose of any business is liable for GST. But, if the customer who
receives the services from the suppliers who does not not belong in
malaysia and not in the intention of any business purposes are not
subject to GST.
GST
Relief on Imports
Certain
goods will be given GST relief on importation under the GST (Relief)
Order 20XX and subject to such conditions as may be prescribed.
GST
Suspended on Import
Under
the GST system, goods are subject to GST upon importation. However,
the payment of GST by importers at the point of importation would
cause difficulties in terms of cash flow as they have to pay the tax
upfront. Thus, a
special scheme known as a
warehousing scheme is introduced to alleviate the cash flow problem.
Under this scheme, GST is suspended on all goods imported and
deposited into a warehouse.
In short,
GST
is not chargeable until the goods
are released
for home consumption in Malaysia.
EXPORTED
SERVICES
Generally,
all exported services are zero-rated provided the conditions are met
as specified under the Goods and Services Tax (Zero Rate Supplies)
Order. These services are generally referred to as international
services.
To find out more,
click here
General
Guide -revised as at 27 October 2013
