Payments, invoices and importation before effective date
(1) Tax shall not be charged and levied on any supply of goods or services or importation of goods made before the effective date.
(2) Where, before the effective date—
(a) any payment is received in connection with a supply of goods or services that will be made on or after the effective date; or
(b) an invoice is issued relating to a supply of goods or services that will be made on or after the effective date,
for the purposes of determining the taxable period to which output tax or input tax is attributable, the payment is taken to have been received or the invoice is taken to have been issued on the effective date.
(3) For the purposes of determining the value of the supply under subsection (2), the payment received or any amount stated in the invoice issued shall be deemed to be inclusive of tax.
(4) Notwithstanding subsection (2), where any person who is licensed under the Sales Tax Act 1972 or the Service Tax Act 1975 is a taxable person under this Act and before the effective date—
(a) has issued an invoice on which sales tax is charged on the sale of any taxable goods or service tax is charged on the provision of taxable service; or
(b) has received payment of sales tax or service tax,
no tax shall be charged on the supply of such goods or services made on or after the effective date to the extent covered by the invoice.
(5) Where any goods which on the effective date have not been released from customs control, it shall be treated for the purposes of this section to be imported at the time when the goods are released by the officer of customs.
(6) Any person who contravenes subsection (1) commits an offence.
Registration before effective date
(1) For the purposes of this section, any person who would be making a taxable supply is liable to be registered under this section if there are reasonable grounds for believing that the total value of his taxable supplies in the month of the effective date and eleven months immediately succeeding the month will exceed the amount of taxable supplies as specified in the order under subsection 20(1).
(2) Any person who is liable to be registered under subsection (1) shall apply to the Director General to be registered and the application shall be made three months before the effective date.
(3) The Director General may register the person under subsection (1) on or from the effective date.
(4) Any person who contravenes subsection (2) commits an offence.
Effect on sales tax and service tax
With effect from the effective date—
(a) sales tax shall not be chargeable on any sale, use, disposal or importation of taxable goods under the Sales Tax Act 1972; and
(b) service tax shall not be chargeable on any taxable service under the Service Tax Act 1975.
Value of supply of goods and services
Where a supply of goods or services is treated as having taken place on or after the effective date, the value of the supply shall be the amount determined under section 15, as is, in the opinion of the Director General, not reasonably attributable to any part of the goods supplied or services performed before the effective date.
Contract with no opportunity to review
(1) This section shall apply where—
(a) a written contract specifically identifies a supply and the consideration for the supply; and
(b) any supply is made pursuant to any contract with no opportunity to review entered into not less than two years before the effective date.
(2) Where a supply is made before the earlier of the following, that is—
(a) five years after the effective date; or
(b) when a review opportunity arises,
the supply made pursuant to a contract with no opportunity to review shall be treated as a zero-rated supply:
Provided that—
(A) the supplier and recipient of the supply are registered persons;
(B) the supply is a taxable supply; and
(C) the recipient is making wholly taxable supply.
(3) For the purposes of this section—
(a) “contract with no opportunity to review” means any written contract or agreement which has no provision for a general review of the consideration for the supply for such a period until a review opportunity arises;
(b) “review opportunity” means an opportunity that arises for the supplier under the contract, acting either alone or with the agreement of one or more of the other parties to the contract, to—
(i) change the consideration directly or indirectly because of the imposition of the tax;
(ii) conduct, on or after the effective date, a general review, renegotiation or alteration of the consideration; or
(iii) conduct, before the effective date, a general review, renegotiation or alteration of the consideration that takes account of the imposition of the tax.
Progressive or periodic supply
(1) Where any supply is made under an agreement for a period or progressively over a period whether or not at regular intervals and that period begins before the effective date and ends on or after the effective date, the proportion of the supply which is attributed to the part of the period on or after the effective date shall be chargeable to tax.
(2) Where the supply under subsection (1) is a supply of services, the supply shall be taken to be made continuously and uniformly throughout the period of that agreement.
(3) Notwithstanding subsection (1), where the supply is made under a warranty that relates to goods or services whether expressed, implied or required by law and the value of the warranty is included in the price of the goods or services, no tax shall be charged on such supply.
(4) Subsections (1) and (2) shall not apply to—
(a) a sale of goods where sales tax has been paid on the sale of the goods to the extent covered by the invoice;
(b) a provision of services where service tax has been paid on the services to the extent covered by the payment or invoice; or
(c) any contract with no opportunity to review under section 187.
Rights granted for life
(1) This section shall apply where—
(a) a taxable person, who is a club or other similar body, makes a supply of services under an agreement;
(b) the agreement provides whether expressly or implicitly that a right is to be granted or exercisable for the rest of the person’s life or for a period of not less than thirty years; and
(c) the rights is granted or first exercisable before the effective date.
(2) Where any payment for rights granted or exercisable for the rest of the person’s life or for a period of not less than thirty years is paid by existing or new members of a club or other similar body for any rights to use facilities of the club or other similar body, the supply of services on which any payment is made—
(a) before the effective date, shall not be chargeable to tax; and
(b) on or after the effective date, shall be chargeable to tax.
Special refund of sales tax for goods held on hand
(1) A person is entitled to a special refund equal to the amount of sales tax in respect of the goods held on hand subject to the following conditions:
(a) the claimant is a registered person under section 20 as at the effective date;
(b) the claimant on the effective date holds goods for the purposes of making a taxable supply;
(c) the goods are taxable under the Sales Tax Act 1972 and the sales tax has been charged to and paid by the claimant; and
(d) the claimant must hold the relevant supplier’s invoice proving that the claimant is the recipient for which sales tax has been charged or import documents proving that the claimant is the importer, consignee or owner for which sales tax has been paid.
(2) In the case where—
(a) the goods are purchased from suppliers other than a licensed manufacturer;
(b) the goods are taxable under the Sales Tax Act 1972; and
(c) the invoice held by the person for the goods purchased does not show that the sales tax has been charged,
he is entitled to a special refund equal to twenty per cent of the value of the goods he holds on the effective date as ascertained from the invoice multiplied by the applicable sales tax rate subject to the following conditions:
(a) the claimant is a registered person under section 20 as at the effective date;
(b) the claimant on the effective date holds goods for the purposes of making a taxable supply; and
(c) the claimant has paid the amount as shown on the invoice.
(3) Where a claim for special refund has been made under subsection (1) or (2) and subsequently the claimant returns the goods to the supplier, the claimant shall account the amount of special refund as his output tax in the return for the taxable period in which the goods are returned.
(4) The special refund shall not apply to—
(a) goods which have been capitalised under accepted accounting principles;
(b) goods which have been used partially or incorporated into some other goods;
(c) goods held for hire, goods held for other than business use and goods not for sale or exchange;
(d) goods on which sales tax has been paid under the Sales Tax Act 1972 before the effective date and subsequently to be exported on or after the effective date where a claim for drawback on the sales tax paid is to be made under section 29 of the same Act; or
(e) goods on which the claimant is allowed to claim for a deduction of sales tax under section 31a of the Sales Tax Act 1972.
Claim for special refund
(1) Any person who is entitled to a special refund under section 190 shall be eligible to claim once and such claim shall be made to the officer of goods and services tax in a form as the Director General may determine not later than six months from the effective date.
(2) Where the amount of special refund under subsection (1) is—
(a) less than ten thousand ringgit, the claimant shall furnish to the officer of goods and services tax an audit certificate signed by a chartered accountant certifying the amount of special refund; or
(b) ten thousand ringgit or more, the claimant shall furnish to the officer of goods and services tax an audit certificate signed by an approved company auditor under section 8 of the Companies Act 1965 certifying the amount of special refund.
(3) Where any information on the claim provided by the claimant is found to be false, inaccurate, misleading or misrepresented—
(a) he shall not be entitled to a special refund and the officer of goods and services tax may refuse such claim; or
(b) he shall be taken not to have been entitled to a special refund and it shall be lawful for the Director General to recover any refund which has been paid to the claimant.
(4) Subject to subsection (3), the special refund shall be refunded quarterly in equal instalments over a period of two years or any shorter period as the Director General may determine.
(5) Where a claim has been made under subsection (1), the goods shall be deemed to have been given credit for input tax and all provisions of this Act shall apply accordingly.
Offsetting unpaid tax, etc., against special refund
Notwithstanding any provision of this Act or any other written law, where any person has failed to pay, in whole or in part—
(a) any amount of tax due and payable, any surcharge accruing, or any penalty, fee or any other money payable under this Act;
(b) any amount of sales tax due and payable, any surcharge accruing, or any penalty or any other money payable under the Sales Tax Act 1972;
(c) any amount of service tax due and payable, any surcharge accruing, or any penalty or any other money payable under the Service Tax Act 1975; or
(d) any amount of customs duty or excise duty,
the Director General may offset, against that unpaid amount referred to in paragraph (a), (b), (c) or (d), any amount or any part of any special refund that is entitled to that person under this Act and the amount that is offset shall be treated as payment or part payment received from that person.
Construction agreements made before the effective date
(1) This section shall apply to the extent that a supply of goods or construction services which relates to the construction, major reconstruction, manufacture or extension of a building or
of a civil engineering work by the supplier, and the goods or construction services are—
(a) supplied in accordance with a written agreement made before the effective date; and
(b) made available to the recipient on or after the effective date.
(2) The value of all work and materials permanently incorporated in or affixed on the site of the building or civil engineering work in accordance with the agreement shall be determined as at the beginning of the effective date.
(3) Tax shall be due and payable on the supply to the extent that the value of the supply exceeds the value determined under subsection (2).
(4) For the purposes of determining the value under subsection (2), a taxable person shall furnish to the officer of goods and services tax a certificate signed by any authorized person as provided under any written law, certifying the value of all work and materials permanently incorporated in or affixed on the site of the building or civil engineering work.
(5) This section shall only apply to the extent that the value referred to in subsection (2) is determined—
(a) in a manner specified by the Director General; and
(b) on or before the end of the supplier’s first taxable period after the effective date or a later date allowed by the Director General.
Retention payments
Where any contract for the supply of goods or services before the effective date provides for the retention of any part of the consideration by a person pending full and satisfactory performance of the contract, or any part of it, by the supplier, the retention payment in respect of any supply made on or after the effective date shall be chargeable to tax.
Unredeemed vouchers
Subject to section 183, goods or services supplied on or after the effective date in the redemption of vouchers that is issued before the effective date shall be chargeable to tax.
Supplies from machine operated by coins, token, etc.
A supply of goods or services from any machine or device operated by coins, tokens and the like is treated as follows:
(a) the first removal of the collection within one week beginning on the effective date shall not be subject to tax and any subsequent removal within one week beginning on the effective date shall be deemed to be tax inclusive; and
(b) any removal of the collection after one week beginning on the effective date shall be deemed to be tax inclusive.
Things done in anticipation of the enactment of this Act
(1) All acts and things done by or on behalf of the Director General in preparation for or in anticipation of the enactment of this Act and any expenditure incurred in relation thereto shall be deemed to have been authorized under this Act, provided that the acts and things done are consistent with the general intention and purposes of this Act, and all rights and obligations acquired or incurred as a result of the doing of those acts or things including any expenditure incurred in relation thereto shall upon the coming into operation of this Act be deemed to be the rights and obligations of the Director General.
(2) Where any approval in respect of registration under Part IV is given and where any appointment in respect of an approved refund agent under section 61 or an agent under section 65 or a tax agent under section 170 is granted before the effective date, such registration or appointment shall be deemed to be made under this Act.
(3) Such approval given or appointment granted under subsection (2) shall only have effect from the effective date.
First Schedule
[Section 4]
MATTERS TO BE TREATED AS A SUPPLY OF GOODS OR A SUPPLY OF SERVICES
Transfer
1. (1) Any transfer of the whole property in movable goods is a supply of goods but subject to subparagraph (2) the transfer—
(a) of any undivided share of the property in movable goods; or
(b) of the possession of the movable goods,
is a supply of services.
(2) If the possession of movable goods is transferred—
(a) under an agreement for the sale of the movable goods; or
(b) under an agreement which expressly stipulates that the property in movable goods will pass at some time in the future,
it is a supply of goods.
Land
2. (1) In the case of land, any transfer of—
(a) the whole right of ownership in land;
(b) land under an agreement for the sale of such land;
(c) land under an agreement which expressly stipulates that the ownership of such land will pass at some time in the future;
(d) any interest under Deed of Assignment; or
(e) any strata title,
is a supply of goods.
(2) Any lease, tenancy, easement, licence to occupy land or transfer of undivided share in land is a supply of services.
(3) Where there is a default in payment under a security relating to land, the transfer of such land shall be treated as a supply of goods.
Treatment or process
3. Any treatment or process which is being applied to another person’s goods is a supply of services.
Utilities, etc.
4. The supply of any form of power including electricity and the supply of gas, water, refrigeration, air-conditioning or ventilation is a supply of goods.
Transfer, etc., of business assets
5. (1) Subject to subparagraph (2), where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, the transfer or disposal is a supply of goods by the person.
(2) Subparagraph (1) does not apply where the transfer or disposal is—
(a) a gift of goods made in the course or furtherance of the business made to the same person in the same year where the total cost to the donor is not more than five hundred ringgit; or
(b) a gift, to an actual or potential customer of the business, of an industrial or commercial sample in a form not ordinarily available for sale to the public.
(3) Whereby or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of goods is a supply of services.
(4) Subparagraphs (1) and (3) shall not deem anything done not for a consideration as a supply except where the person who is carrying on a business is entitled to credit under section 38 on the supply or importation of the goods.
(5) The supply of goods in subparagraph (1) or the supply of services in subparagraph (3) is to be treated as made in the course or furtherance of the business, and in the case of a business carried on by an individual—
(a) subparagraph (1) shall apply to any transfer or disposal of goods in favour of himself personally; and
(b) subparagraph (3) shall apply to goods used or made available for use by himself personally.
(6) Notwithstanding paragraph (1), where a taxable person who is in the business of making a taxable supply of goods has claimed input tax under section 38 and there is a change of use of such goods and the goods are excluded from any credit under subsection 38(12), the use of such goods by him, whether for a consideration or not, shall be treated as a supply of goods.
(7) Where any goods, forming part of the business assets of a taxable person, are sold by any other person who has the power to do so to recover any debt owed by the taxable person, the goods shall be deemed to be supplied by the taxable person in the course or furtherance of his business.
(8) Subject to subparagraph (9), where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless—
(a) the business is transferred as a going concern to another person under section 68; or
(b) the business is carried on by a personal representative who is deemed to be a taxable person under section 31.
(9) Subparagraph (8) does not apply to any goods where the person who ceases to be a taxable person can show to the satisfaction of the Director General—
(a) that no credit for input tax in respect of the supply or importation of the goods has been allowed to him and the goods were not acquired by him as part of the assets of a business which was transferred to him as a going concern by another taxable person; or
(b) that the goods were acquired by him from a person other than a taxable person.
Supply of services to connected persons
6. Subject to subparagraph 5(3), where a supply of services is made not for a consideration by a taxable person to a connected person as referred to in the Third Schedule, the supply to the connected person is a supply of services.
Second Schedule
[Section 4] MATTERS TO BE TREATED AS NEITHER A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
Transfer of going concern
1. The supply of business assets to a person under section 68 is treated as neither a supply of goods nor a supply of services if the assets are to be used by transferee in carrying on the same kind of business, whether or not as part
of any existing business, as that carried on by the transferor or where the supply to whom he transfers relates to part of his business only as a going concern, that part of business shall be capable of separate operation and the transferee is already, or immediately becomes as a result of the transfer, a taxable person.
Pension, provident or social security fund
2. Any contribution made to the pension, provident or social security fund under any written law shall be treated as neither a supply of goods nor a supply of services.
Supply by any society or similar organization
3. The supply of any goods or services by any society or similar organization registered under any written law shall be treated as neither a supply of goods nor a supply of services where—
(a) the supply to its members relates to its aims and objectives and available without payment other than a membership subscription and the value of the supply is nominal; or
(b) the supply to a donor or sponsor has no commercial value.
Supplies excluded from any credit
4. Where the whole or any part of tax charged on any supply or importation of goods is excluded from any credit under subsection 38(12), the subsequent supply of the same goods shall be treated as neither a supply of goods nor a supply of services.
Supply of goods or services under Islamic financial arrangement
5. Where any person makes a supply of goods or services under an Islamic financial arrangement, any supply made in such arrangement other than the provision of financing shall be treated as neither a supply of goods nor a supply of services.
Insurance indemnity settlement
6. Any supply of goods between an insurer or takaful operator and an insured in the course of settling a claim under the insurance policy or takaful contract shall be treated as neither a supply of goods nor a supply of services.
Diplomatic and consular services
7. Any supply of diplomatic or consular services by a foreign mission shall be treated as neither a supply of goods nor a supply of services.
Third Schedule
[Section 15]
VALUE OF SUPPLY OF GOODS OR SERVICES
Open market value
1. (1) The open market value of any supply of goods or services being a supply freely offered and made between persons who are not connected persons shall be in the following order:
(a) the open market value of any supply of goods or services shall be equal to the consideration in money which the supply of those goods or services would generally fetch if it were to be a supply freely offered and made between persons who are not connected persons and supplied substantially under the same circumstances at or about the same time in Malaysia;
(b) where the open market value of any supply of goods or services cannot be determined under subparagraph (a), the open market value shall be the value of a similar supply in Malaysia, being a supply freely offered and made between persons who are not connected persons;
(c) where the open market value of any supply of goods or services cannot be determined under subparagraph (a) or (b), the open market value shall be determined based on the information and data available in Malaysia which provides a sufficiently objective approximation of the consideration in money which could be obtained for the supply of those goods or services.
(2) Where a taxable person making the supply is connected with the person to whom the supply is made, and—
(a) the value of a supply made by a taxable person for a consideration in money or for a consideration not wholly consisting of money is less than its open market value; and
(b) the supply is a taxable supply and the person to whom the supply is made is not entitled to credit under section 38 for the whole or any part of the tax on the supply,
the value of the taxable supply of goods and services shall be taken to be its open market value.
(3) For the purposes of subparagraph (1)(b), “similar supply” means any other supply of goods or services that closely represents the supply being valued in respect of materials, components, parts and characteristics and are functionally and commercially interchangeable with the supply being valued having regard to the quality and reputation of the other supply and the supply being valued.
(4) For the purposes of this Act, “open market value” shall be taken to be an amount, with the addition of the tax chargeable.
Connected persons
2. (1) A person shall be deemed to be connected if—
(a) they are officers or directors of one another’s business;
(b) they are legally recognized partners in business;
(c) any one person directly or indirectly owns, controls, or holds five per cent or more of the outstanding voting stock or shares of both of them;
(d) one of them directly or indirectly controls the other;
(e) both of them are directly or indirectly controlled by a third person;
(f) together they directly or indirectly control a third person; or
(g) they are members of the same family.
(2) A person shall be deemed to be members of the same family if—
(a) they are connected by blood relationship within the fourth degree of relationship;
(b) they are married to one another or if one is married to a person who is connected within the fourth degree of relationship to the other; or
(c) one has been adopted as the child of the other or as a child of a person who is within the third degree of relationship to the other.
(3) A trustee in a settlement is connected with—
(a) any individual who in relation to the settlement is a settlor;
(b) any person who is connected with such an individual; and
(c) a body corporate which is connected with that settlement.
Token, stamp (other than postage stamp) or voucher
3. Where a right to receive goods or services for a monetary value stated on any token, stamp (other than postage stamp) or voucher is granted for a consideration, the consideration shall be disregarded except to the extent, if any, it exceeds the monetary value.
Business assets
4. Where there is a supply of goods by virtue of—
(a) subparagraph 5(1) of the First Schedule, not for a consideration; or
(b) subparagraph 5(8) of the First Schedule,
the value of the supply shall be the open market value.
Foreign exchange
5. Where any sum relevant for determining value is expressed in a currency other than ringgit, it is to be converted into ringgit at the selling rate of exchange prevailing in Malaysia at the time when the supply takes place or in the case of the importation of goods, at the rate of exchange determined by the Director General at the time applicable for the calculation of customs duty or excise duty and valuation.
Value of supply based on retail price under certain circumstances
6. (1) Where—
(a) the whole or part of a business carried on by a taxable person consists in supplying to a number of persons goods to be sold, whether by them or others, by retail; and
(b) those persons are not taxable persons,
the Director General may by notice in writing to the taxable person direct that the value of any such supply by him after the giving of the notice or after such later date as may be specified in the notice shall be taken to be its open market value on a sale by retail.
(2) A notice under subparagraph (1) may be varied, withdrawn or cancelled by the Director General by a further notice given in writing.
Value of supply of goods from a person licensed under section 65 a of the Customs Act 1967 or operating in a free industrial zone under paragraph 10(1)(b) of the Free Zones Act 1990
7. Where a taxable supply of goods is made by a person licensed under section 65a of the Customs Act 1967 or a person operating in a free industrial zone under paragraph 10(1)(b) of the Free Zones Act 1990 to any person who is not licensed under section 65a of the Customs Act 1967 or to any person not operating in a free industrial zone under paragraph 10(1)(b) of the Free Zones Act 1990, the value of the goods shall be the value as determined under section 16.
Value of betting and gaming supplies
8. (1) Where a taxable supply of services is made by a person licensed under any written law involving bettings, sweepstakes, lotteries, gaming machines or games of chance, the value of supply shall be determined in accordance with the following formula:
X (A - B) 100 + C
where A is the total amount received for the supply less any tax or duty under any other written law except excise duty; B is the amount of money, if any, payable to any person participating successfully in the bettings, sweepstakes, lotteries, gaming machines or games of chance; and C is the rate of tax fixed under section 10.
(2) Where the value of supply determined under paragraph (1) is negative, such value shall be treated as nil.
Fourth Schedule
[Section 127]
NON-APPEALABLE MATTERS
The Goods and Services Tax Appeal Tribunal shall not have jurisdiction to hear appeals against—
(a) any matter which is inherent of a statutory restriction under this Act;
(b) any direction to treat persons as a single taxable person under section 23;
(c) any refusal of voluntary registration under section 24;
(d) any refusal of group registration under section 27;
(e) any matter relating to reassignment of the taxable period under subsection 40(4);
(f) offsetting tax against refund under section 45;
(g) any seizure and selling of any goods for recovery of any amount under section 47(2);
(h) any refusal of payment by instalment under section 51;
(i) any decision to reduce or disallow any refund under subsection 57(2);
(j) any refusal to refund an amount paid by any person under subsection 57(5);
(k) any refusal to remit any penalty or surcharge under subsection 62(2);
(l) any refusal to approve any application for any scheme under Part VIII;
(m) any advance ruling made under section 77;
(n) the exercising of powers under Part X;
(o) the compounding of offences under section 121;
(p) any matter relating to approval of reward by the Director General under section 171; and
(q) any matter relating to special refund under sections 190, 191 and 192.
Hakcipta Pencetak H PERCETAKAN NASIONAL MALAYSIA BERHAD Semua Hak Terpelihara. Tiada mana-mana bahagian jua daripada penerbitan ini boleh diterbitkan semula atau disimpan di dalam bentuk yang boleh diperolehi semula atau disiarkan dalam sebarang bentuk dengan apa jua cara elektronik, mekanikal, fotokopi, rakaman dan/ atau sebaliknya tanpa mendapat izin daripada Percetakan Nasional Malaysia Berhad (Pencetak kepada Kerajaan Malaysia yang dilantik).
DICETAK OLEH PERCETAKAN NASIONAL MALAYSIA BERHAD, KUALA LUMPUR BAGI PIHAK DAN DENGAN PERINTAH KERAJAAN MALAYSIA
Source: Laws of Malaysia, Attorney General's Chambers of Malaysia (lom.agc.gov.my). Not a copy of the Gazette printed by the Government Printer (Interpretation Acts 1948 and 1967, s 61).
