The 2012 worldwide VAT, GST and sales tax guide

426 M ALAYSIA
Service tax registration
None, or annual sales turnover
exceeding RM 150,000,
RM 300,000 or RM 3 million
(depending on the types of
taxable services provided)
B. Scope of the taxes
Sales tax. Sales tax is a single-stage tax, applied to sales of
locally manufactured taxable goods as well as to taxable goods
imported for domestic consumption.
All taxable goods manufactured in, or imported into, Malaysia
are subject to sales tax, unless they are specifically exempted by
law. However, sales tax does not apply to goods manufactured in,
or imported into, Labuan, Langkawi, Tioman, the (Inter-Country)
Joint Development Area, free zones, licensed warehouses or
licensed manufacturing warehouses.
Service tax. Service tax is a single-stage tax applied to specified
taxable services. Services that are not included in the prescribed
list are not taxable. Nine major groupings of taxable services are
currently included in the prescribed list. Taxable services include,
but are not limited to, telecommunication services, employment
services, consultancy services, management services, legal services,
accounting services, advertising services, engineering
services, surveying services, architectural services, insurance services
and car hire services.
Service tax does not apply in Labuan, Langkawi, Tioman, the
(Inter-Country) Joint Development Area and free zones.
Proposed changes. Malaysia plans to carry out a major indirect
tax reform. It is proposed that a new Goods and Services Tax
(GST) system replace the current sales tax and service tax system.
It appears that the new Malaysian GST will operate similarly
to other value-added tax (VAT) and GST systems around the
world. It is proposed that the standard GST rate will be 4% and
that a zero rate will apply to exports and some goods, such as
basic foodstuffs. GST exempt status is expected to apply to most
financial services, including Islamic financial products, life
insurance and investment linked insurance, the lease, rental or
sale of residential real estate, mass domestic public education
services and health services. As a result, no output tax will apply
and correspondingly, no entitlement to input tax will exist. The
Malaysia government has not yet announced the date of introduction
of the GST.
C. Who is liable
Sales tax. Any person that manufactures taxable goods in the
course of a business must apply for a sales tax license. The license
must be displayed at the licensed manufacturer’s principal place
of business. If the licensed manufacturer carries on business in
more than one location, each manufacturing site must be covered
by the license and a copy of the license must be displayed at each
site.
Exemption from sales tax licensing. A manufacturer of taxable
goods whose sales turnover did not exceed RM 100,000 in the
preceding 12 months and whose sales are not expected to exceed