Salient Features of Malaysia SST

The Ministry of Finance, Malaysia has announced to enact the new Sales and Service Tax Law 2018 with effect from Sep 1 2018. If you are an existing customer of Deskera ERP or planning to use Deskera ERP, we’ll ensure all Deskera customers remain compliant.

Salient Features of Sales Tax

Highlight Description
Source of information and important links
Key Features
  • Single Stage Tax (Imposed only once in the Supply Chain either at the time manufactured or at the time imported)
  • Levied on taxable goods manufactured in Malaysia by Taxable Person
  • Levied on taxable goods imported in Malaysia
General Rate of Tax 10%
Chargeability Taxable Person = Manufacturer of Taxable Goods if annual turnover exceeds RM 500,000
Tax System MySST
Process
Valuation
  • Manufactured Goods: Transaction Value
  • Imported Goods : (Customs Value+ Customs Duty + Excise Duty)
Key Compliances by Taxable Person
  • Issue Tax Invoice
  • Charge Sales Tax on Sales
  • Submit Bi-Monthly Returns
Return Filing Due Date Can differ as per Financial Year End of the Manufacturer
Branch Registration/ Group Registration (For Multiple Entities) Not Required
Tax Invoice Format Not prescribed. Contents are prescribed.
Language of the Tax Invoice Bahasa Melayu or English
CN & DN Allowed Yes, for making Tax Adjustments
Sales Tax Return Filing SST-01, Bimonthly i.e. every two months, as per Taxable Period. Taxable Period depends upon Financial Year the company has adopted.

First taxable period – Sep – Oct 2018
Subsequent taxable period – Nov – Dec, Jan – Feb, Mar – Apr, May – Jun
Specific basis – subject to an approval from the Director General

Time of Submission Maximum upto last day of the next month after end of taxable period
Required to submit Nil Return? Yes
Method of Submission of Sales Tax Return E-filing or post to SST Processing Centre
Method of Sales Tax Payment E-payment or by Cheque/Draft/Post to SST Processing Centre
Relief from Bad Debts Sales Tax that has been paid by the registered manufacturer but such tax was not recovered from the client, can be refunded by the RMCD. However, the manufacturer should have written off this Invoice/amount receivable as “Bad Debts”
Exemptions Exemption is manyfold: Based on Goods & Based on Persons & Based on Area:

A.List of Exempt Goods

Please refer to Proposed Sales Tax (Goods Exempted From Sales Tax) Order, 2018. Examples – Live Animals, Vegetables & Medicines

B.List of Persons Exempt from Tax :

  1. Manufacturers of Non Taxable Goods
  2. Certain Registered Manufacturers : on Purchases of Raw Materials, Components & packaging materials
  3. Certain Persons not required to get registered : Tailor, Jeweller etc

C.List of Designated Areas exempt from Sales Tax :

Designated Area : (DA) Labuan, Langkawi & Tioman

Special Area (SA) : Free Zone, Licensed Warehouse, Join Development Area(JDA)

(Taxable Area = Principal Customs Area i.e. PCA)

GST Input Tax Credit available? Yes
Transitional Issues (For Information) Special Schemes like ATS, ATMS & Margin Scheme are not available under SST

Salient Features of Service Tax

Highlight Description
Source of information and important links
  1. FAQ on SST published by Royal Malaysian Customs Department (RMCD)
  2. Other documents published by RMCD
Chargeability Provision of Taxable Service by Taxable Person in his business in Malaysia
Imported Services No Service Tax is charged.
Export of Services No Service Tax is charged.
General Rate of Tax 6%
Cards: Specific rate of 25 MYR per card
Tax System MySST
Process
Basis of Accounting for Service Tax Payment basis i.e. need to Pay Service Tax only if client has made payment if payment is received within 12 months from the issue of Invoice. Tax is due on the day immediately after the expiry of the 12 month period.
Contra System Reduction in service tax on account of Cancellation of service/Post supply discount
Branch Registration/ Group Registration (For Multiple Entities) Branch registration can also be obtained
Relief from Bad Debts Service tax refundable if bad debts incurred

Please read more about SST in Deskera ERP here.

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Brajesh, drives direction of Deskera’s future technology and shapes Deskera as the technology leader. With his expertise and over 15 years of experience, he has significantly contributed to Deskera’s success. Brajesh oversees the global research and development team, analytics, integration and quality.