Non-application to Government
Open ↗(1) This Act shall not apply in relation to any supply of goods or services made by—
(a) the Federal Government and State Governments, unless the Minister otherwise directs by order published in the Gazette; or
(b) any local authority and statutory body in respect of its regulatory and enforcement functions.
(2) For the purposes of subsection (1), the local authority or statutory body is taken to perform its regulatory and enforcement functions where—
(a) the local authority or statutory body is given powers by any written law expedient for or in connection with the performance of its regulatory and enforcement functions; and
(b) the supply made by the local authority or statutory body is not of the same kind or similar to a taxable supply made by any other person in the course or furtherance of a business.
Agents
Open ↗(1) Where goods or services are supplied by an agent acting on behalf of a principal, the supply shall be deemed to be made by the principal and not by the agent.
(2) Where goods or services are supplied to an agent acting on behalf of a principal, the supply shall be deemed to be made to the principal and not to the agent.
(3) Where goods or services are supplied through an agent acting in his own name, the supply shall be treated as a supply to the agent and as a supply by the agent.
(4) Notwithstanding subsection (3), where an agent is acting in his own name as an auctioneer and the goods are not the goods described under subparagraph 5(7) of the First Schedule—
(a) a supply by a principal who is a taxable person to the auctioneer shall be disregarded; and
(b) the supply made by the auctioneer shall be treated as a supply made by the principal and the auctioneer whether or not he is a taxable person shall be liable for any tax due and payable on the supply.
(5) Where goods are deemed to be supplied by a taxable person pursuant to subparagraph 5(7) of the First Schedule, any person, whether or not he is a taxable person, who sells the goods in satisfaction of any debt owed by that taxable person, shall be liable for any tax due and payable on the supply.
(6) Where a person who does not belong in Malaysia makes a taxable supply in Malaysia and is liable to be registered under section 20 or intends to be registered under section 24, he shall appoint an agent to act on his behalf and such agent, whether or not he is a taxable person, shall be liable for the tax and comply with any other requirements imposed under this Act as if the agent is a person who does not belong in Malaysia.
(7) Where an agent has been appointed under subsection (6), the Director General may, with reasonable cause, direct the person who does not belong in Malaysia, by giving a notice in writing to appoint another agent to act on his behalf.
(8) For the purposes of subsection (6), a person shall be treated as not belonging in Malaysia if—
(a) he has no business establishment or other fixed establishment in Malaysia;
(b) he has no business establishment or other fixed establishment in any country and his usual place of residence is not in Malaysia; or
(c) he has a business establishment or other fixed establishment both in Malaysia and elsewhere and his establishment which is most directly concerned with the supply is not in Malaysia,
and for the purposes of paragraphs (a), (b) and (c), a fixed establishment in Malaysia or in any other country includes a branch or an agency through which a person carries on a business in Malaysia or in that other country, as the case may be.
(9) Where goods are imported and supplied by an agent who is a taxable person acting on behalf of a principal who is a person other than a taxable person, the goods shall be deemed to be imported and supplied by the agent.
Supplies spanning change in rate or description
Open ↗(1) Notwithstanding section 11, this section shall apply where there is a change in the—
(a) rate of tax fixed under section 10;
(b) description of the supply of goods or services determined as zero-rated supply under section 17; or
(c) description of the supply of goods or services determined as exempt supply under section 18.
(2) Where there is a change in the rate of tax fixed under section 10, the rate at which the tax is chargeable on any supply spanning the change in the rate of tax shall be as follows:
(a) tax shall be charged at the old tax rate on the higher of the following amounts:
(i) full payment or part payment received before the date of change in the rate of tax; or
(ii) value of the supply of goods where the goods are wholly or partly removed or made available or the services are wholly or partly performed before the date of change in the rate of tax; and
(b) tax shall be charged at the new tax rate on the difference, if any, between the amount of the whole supply and the amount referred to in paragraph (a).
(3) Where there is a change in the description of the supply of goods or services determined as zero-rated supply under section 17, the rate at which tax is chargeable on the supply spanning the change in the description shall be as follows:
(a) in the case of a zero-rated supply being changed to a standard-rated supply and spans the change—
(i) no tax shall be charged on the higher of the following amounts:
(aa) full payment or part payment received before the date of change in the description; or
(bb) value of the zero-rated supply of goods where the goods are wholly or partly removed or made available or the services are wholly or partly performed before the date of change in the description; and
(ii) tax shall be charged on the difference, if any, between the amount of the whole supply and the amount referred to in subparagraph (a)(i);
(b) in the case of a standard-rated supply being changed to a zero-rated supply and spans the change—
(i) tax shall be charged on the higher of the following amounts:
(aa) full payment or part payment received before the date of change in the description; or
(bb) value of the standard-rated supply of the goods where the goods are wholly or partly removed or made available or the services are wholly or partly performed before the date of change in the description; and
(ii) no tax shall be charged on the difference, if any, between the amount of the whole supply and the amount referred to in subparagraph (b)(i).
(4) Where there is a change in the description of the supply of goods or services determined as an exempt supply under section 18, the rate at which tax is chargeable on the supply spanning the change in the description shall be as follows:
(a) in the case of an exempt supply being changed to a taxable supply and spans the change—
(i) no tax shall be charged on the higher of the following amounts:
(aa) full payment or part payment received before the date of change in the description; or
(bb) value of the exempt supply of goods where the goods are wholly or partly removed or made available or the services are wholly or partly performed before the date of change in the description; and
(ii) tax shall be charged on the difference, if any, between the amount of the whole supply and the amount referred to in subparagraph (a)(i);
(b) in the case of a taxable supply being changed to an exempt supply and spans the change—
(i) tax shall be charged at the old tax rate on the higher of the following amounts:
(aa) full payment or part payment received before the date of change in the description; or
(bb) value of the taxable supply of the goods where the goods are wholly or partly removed or made available or the services are wholly or partly performed before the date of change in the description; and
(ii) no tax shall be charged on the difference, if any, between the amount of the whole supply and the amount referred to in subparagraph (b)(i).
(5) For the purposes of this section—
(a) any supply spanning the change in the rate of tax or description refers to any supply where—
(i) full payment is received before the date of change in the rate of tax or description and the goods are wholly removed or made available or the services are wholly performed after the date;
(ii) full payment is received after the date of change in the rate of tax or description and the goods are wholly removed or made available or the services are wholly performed before the date;
(iii) full payment is received before the date of change in the rate of tax or description and the goods are partly removed or made available or the services are partly performed before and after the date;
(iv) full payment is received after the date of change in the rate of tax or description and the goods are partly removed or made available or the services are partly performed before and after the date;
(v) the goods are wholly removed or made available or the services are wholly performed before the date of change in the rate of tax or description and part payment is received before and after the date;
(vi) the goods are wholly removed or made available or the services are wholly performed after the date of change in the rate of tax or description and part payment is received before and after the date;
(vii) part payment is received before the date of change in the rate of tax or description and part payment is received after the date;
(viii) part payment is received before the date of change in the rate of tax or description and the goods are partly removed or made available or the services are partly performed after the date;
(ix) the goods are partly removed or made available or the services are partly performed before the date of change in the rate of tax or description and part payment is received after the date; or
(x) the goods are partly removed or made available or the services are partly performed before the date of change in the rate of tax or description and the goods are partly removed or made available or services are partly performed after the date;
(b) “new tax rate” means the rate of tax applicable on the date the change in the rate of tax comes into operation;
(c) “old tax rate” means the rate of tax applicable immediately before the date the change in the rate of tax comes into operation;
(d) “standard-rated supply” means any supply which is chargeable to a rate of tax fixed under section 10.
(6) Any person who contravenes this section commits an offence.
Adjustment of contracts on changes in rate of tax
Open ↗Where after the entering into any contract for any taxable supply of goods or services and before the goods are supplied or services are performed, there is a change in the rate of tax charged on the supply, unless an express provision for the exclusion of any such change in the tax charged is contained in the contract or where the change in the rate of tax has been taken into account, the contract shall be deemed to be adjusted as follows:
(a) where the change in the rate of tax renders the supply liable to be charged with tax or increases the amount of any tax charged or chargeable in relation to the supply, the supplier may add to the agreed price in the contract the amount of the tax or the increase in the tax;
(b) where the change in the rate of tax renders the supply exempt from tax or reduces the amount of any tax charged or chargeable in relation to the supply, the supplier may deduct from the agreed price in the contract the amount of the tax or the reduction of the tax.
Transfer of going concern
Open ↗(1) Where any taxable person (hereinafter referred to as the “transferor”) transfers his business to another person (hereinafter referred to as the “transferee”) as a going concern—
(a) for the purposes of determining whether the transferee is liable to be registered under this Act, the transferee shall be treated as having carried on the business before as well as after the transfer and any supply by the transferor shall be treated as supplied by the transferee; and
(b) the transferor shall transfer to the transferee, unless otherwise permitted in writing by the officer of goods and services tax upon the request of the transferor, all records relating to the business as required under section 36 and the transferee shall keep the records in accordance with section 36.
(2) Where a business or part thereof carried on by a taxable person is transferred as a going concern to a transferee, who is or is to be a taxable person by virtue of the transfer together with the assets of the business—
(a) any right of the transferor to a credit for input tax or a refund of tax shall become the right of the transferee whether or not existing at the date of the transfer and when the transferor has made a claim for credit for input tax or refund of tax before the date of transfer, it shall be treated as having been made by the transferee; and
(b) any liability of the transferor existing at the date of the transfer to furnish a return or to account for or pay tax under section 41 shall become the liability of the transferee and any return furnished or tax accounted for or paid by the transferor shall be treated as having been made by the transferee.
(3) Where a business carried on by a transferor, who has been approved to account for the tax on a payment basis, is transferred in circumstances where subsection 20(4) applies, the transferee shall continue to account for and pay the tax on the supplies made and received by him on or after the date of transfer as if he were the transferor who was given the approval to account for the tax on a payment basis.
(4) The transferor and transferee may claim any input tax incurred which is incidental to the transfer of going concern.
Joint venture
Open ↗(1) Where two or more registered persons participate in a petroleum-related activity under a venture, evidenced contractually in writing, for the purposes of making taxable supply (hereinafter referred to as “venturers”), the venturers may apply to the Director General to be deemed as a joint venture.
(2) The venturers shall, in the application under subsection (1), nominate one of the venturers to be the venture operator or to appoint a joint operating company to be the venture operator.
(3) A joint operating company appointed under subsection (2) shall be deemed to be a taxable person for the purposes of the joint venture.
(4) Where a joint venture under subsection (1) has been approved, the joint venture shall be registered as a registered person and the registration shall be in the name of the venture operator.
(5) Where a joint venture has been registered under subsection (4)—
(a) the venture operator shall maintain a separate account for the joint venture;
(b) any taxable supply of goods or services for the purposes of carrying on a business of the joint venture between a venturer and the venture operator shall be disregarded;
(c) where—
(i) each venturer acquires any taxable supply of goods or services for the joint venture, the venturer shall claim the deduction of input tax on acquisitions made by him in respect of the joint venture;
(ii) the venture operator acquires any taxable supply of goods or services for the joint venture, the venturer shall claim the deduction of input tax on acquisitions made by him in respect of the joint venture;
(d) each venturer shall account and pay for tax on the supplies made by him in respect of the joint venture.
(6) The Director General may cancel the registration of a joint venture under subsection (4) if he deems fit for the protection of the revenue.
(7) All venturers of the joint venture shall be liable jointly and severally for any tax due from venture operator.
(8) Where the Minister prescribes any other activity to be deemed as a joint venture under section 177, this section shall apply mutatis mutandis to the prescribed activity.
(9) For the purposes of this section—
(a) “venture” means a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control but does not include jointly controlled entities;
(b) “petroleum-related activity” means an upstream activity which begins with exploration including seismic and drilling activities and ends when the product (crude oil, natural gas or condensate) is allocated to the venturers;
(c) any petroleum-related activity which is outsourced to a third party shall be taken as an activity undertaken and managed by the third party and not an activity undertaken and managed by the joint venture;
(d) “venturer” means a party to a joint venture and has joint control over that joint venture;
(e) “venture operator” means the person who operates or manages the joint venture.
(10) Any person who contravenes subsection (5) in respect of paragraph (d) commits an offence.
Warehousing Scheme
Open ↗(1) In relation to goods that have been imported and deposited in the warehouse and for which tax would be chargeable on the imported goods, there shall be a scheme to be known as the “Warehousing Scheme” which allows supplies of goods made within the warehouse to be disregarded except for the last of such supplies of goods which are removed before the duty point.
(2) The last supply referred to in subsection (1) shall be treated as taking place at the duty point and the value of the supply shall be treated as including the duty, if any.
(3) The tax on the last supply referred to in subsection (1) shall be due and payable at the duty point, together with the duty, if any, by the person who is required to pay the duty or, if no duty is due and payable, by the person by whom the goods are removed, except as may be otherwise provided by regulations made under this Act.
(4) No person shall remove from a Warehousing Scheme any goods subject to tax and duty except—
(a) after payment of the tax together with the duty, if any;
(b) if the goods are in customs warehouse or licensed warehouse, under such conditions as the Director General deems fit to impose, for deposit in another customs warehouse or licensed warehouse; or
(c) in accordance with such conditions as the Director General deems fit to impose, for a re-export from Malaysia,
and in no case shall any goods be removed from a warehouse.
(5) Any goods which are not subject to any duty shall be construed as being under customs control if they are subject to a Warehousing Scheme and shall be construed as being removed from customs control if they are removed from a Warehousing Scheme.
(6) A reference in this section to goods being subject to a Warehousing Scheme shall be a reference to goods being kept in a warehouse or being transported between warehouses without the payment of any tax or duty and a reference to the removal of goods from a warehouse shall be construed accordingly.
(7) For the purposes of this section—
(a) “customs warehouse” has the meaning assigned to it in section 2 of the Customs Act 1967;
(b) “duty” means customs duty or excise duty or to both;
(c) “duty free shop” has the meaning assigned to it in section 2 of the Customs Act 1967;
(d) “duty point” in relation to any supply of goods, means the time when the goods are removed from the Warehousing Scheme;
(e) “inland clearance depot” has the meaning assigned to it in section 2 of the Customs Act 1967;
(f) “licensed warehouse” has the meaning assigned to it in section 2 of the Customs Act 1967; and
(g) “warehouse” means—
(i) any customs warehouse;
(ii) any licensed warehouse;
(iii) any duty free shop;
(iv) any inland clearance depot.
(8) Any person who contravenes subsection (4) commits an offence.
Approved Trader Scheme
Open ↗(1) Subject to the prescribed conditions, there shall be a scheme to be known as the “Approved Trader Scheme” which allows the Director General to suspend the payment of tax chargeable on the goods imported by any taxable person who qualifies at the time of importation provided that the goods are imported in the course or furtherance of his business.
(2) Any taxable person granted an approval under the Approved Trader Scheme shall account the suspended payment of tax in the return for the taxable period to which the suspension relates.
Approved Toll Manufacturer Scheme
Open ↗(1) There shall be a scheme to be known as the “Approved Toll Manufacturer Scheme” which allows any taxable person who qualifies to disregard the supply of services which comprises the treatment or processing of goods for and to a person who belongs in a country other than Malaysia subject to the prescribed conditions (hereinafter referred to as the “toll manufacturer”).
(2) Any person who belongs in Malaysia and receives the treated or processed goods from the toll manufacturer (hereinafter referred to as the “recipient”) shall account and pay for tax as if the recipient had himself supplied and acquired the goods in Malaysia in the course or furtherance of his business and as if the supply were a taxable supply.
(3) Notwithstanding section 11, the supply of the treated or processed goods shall be regarded as taking place at the earlier of the following time:
(a) whenever a payment in respect of the supply is made; or
(b) whenever the recipient receives an invoice relating to the supply.
(4) Where the recipient is a taxable person, he shall include the tax due and payable in his return.
(5) Where the recipient is a person other than a taxable person, tax shall be charged on the supply made by him and he shall be liable for any tax due and payable on the supply.
(6) This section shall not apply to a person who does not belong in Malaysia and who has appointed an agent to act on his behalf under subsection 65(6).
(7) For the purposes of this section, a person shall be treated as belonging in a country if—
(a) he has his usual place of residence in that country where the supply is made to him as an individual and received by him otherwise than for the purpose of any business carried out by him; and
(b) in the case where paragraph (a) does not apply—
(i) he has in that country a business establishment or fixed establishment and no such establishment elsewhere;
(ii) he has no business establishment or fixed establishment in any country but his usual place of residence is in that country; or
(iii) he has business establishments or fixed establishments both in that country and elsewhere and his establishment which is most directly concerned with the supply is in that country.
(8) For the purposes of subsection (7), a fixed establishment in any country includes a branch or an agency through which a person carries on a business in that country.
Approved Jeweller Scheme
Open ↗(1) There shall be a scheme to be known as the “Approved Jeweller Scheme” which allows any taxable person (hereinafter referred to as the “approved jeweller”) who qualifies to account the tax on the prescribed supply of goods received by him in the course or furtherance of his business from another taxable person subject to the prescribed conditions (hereinafter referred to as the “supplier”).
(2) Notwithstanding section 9, where the supplier makes any prescribed supply of goods to the approved jeweller and the prescribed supply of goods is a taxable supply—
(a) the supplier shall charge tax and is not liable to account for the tax in respect of that supply; and
(b) the approved jeweller is not required to pay the tax charged in paragraph (a) to the supplier but shall account the tax in his return.
(3) Notwithstanding section 11, the prescribed supply of goods shall be treated as taking place at the earlier of the following time:
(a) whenever a payment in respect of the prescribed supply of goods is made; or
(b) when the approved jeweller receives a tax invoice relating to the supply.
Flat Rate Scheme
Open ↗(1) There shall be a scheme to be known as the “Flat Rate Scheme” which allows any person who is a qualified person and is carrying on a business involving the prescribed activities (hereinafter referred to as the “approved person”) to include a prescribed flat rate addition in the consideration for any taxable supply of goods made by him from the prescribed activities to any registered person in the course or furtherance of his business.
(2) An approved person shall not—
(a) account for the prescribed flat rate addition; and
(b) be entitled to credit for input tax against output tax under section 38.
(3) An approved person shall issue an invoice on the taxable supply of goods made by him from the prescribed activities to the registered person in the course or furtherance of his business.
(4) A registered person shall be entitled to a credit for input tax against output tax under section 38 on any taxable supply of goods acquired from the approved person from the prescribed activities under the Flat Rate Scheme equal to the prescribed flat rate addition on the supply.
(5) An approved person shall not include the prescribed flat rate addition in the consideration for any supply of goods made by him—
(a) from any activity other than the prescribed activities; or
(b) to any person other than the registered person.
(6) An approved person who contravenes subsection (3) or (5) commits an offence and shall, on conviction, be liable—
(a) to a fine not exceeding fifteen thousand ringgit or to imprisonment for a term not exceeding two years or to both; and
(b) to a penalty of the amount of prescribed flat rate addition so shown.
(7) Any person other than an approved person who issues an invoice or a receipt showing an amount as being the prescribed flat rate addition or as being attributable to the prescribed flat rate addition commits an offence and shall, on conviction, be liable—
(a) to a fine not exceeding fifteen thousand ringgit or to imprisonment for a term not exceeding two years or to both; and
(b) to a penalty of the amount of prescribed flat rate addition so shown.
Capital markets
Open ↗(1) A holder of a Capital Markets Services Licence and holders of a Capital Markets Services Representative’s Licence shall be treated as a single entity for the purposes of registration under this Act:
Provided that the holder of a Capital Markets Services Licence is a taxable person.
(2) The registration of the single entity shall be in the name of the holder of the Capital Markets Services Licence and the holder of the Capital Markets Services Licence shall be the lead member of the single entity.
(3) Where the holder of a Capital Markets Services Licence and holder of a Capital Markets Services Representative’s Licence have been registered as a single entity—
(a) the holders of the Capital Markets Services Representative’s Licence shall be members of the single entity;
(b) any taxable supply of goods or services in carrying on a business of dealing in securities or dealing in derivatives between members and lead member of the single entity shall be disregarded;
(c) any business of dealing in securities or dealing in derivatives transacted by a member of the single entity shall be treated as a supply made by the lead member;
(d) any supply of goods and services in carrying on a business of dealing in securities or dealing in derivatives made to a member of the single entity shall be treated as a supply made to the lead member;
(e) the lead member of the single entity shall maintain separate account for each member of his single entity;
(f) the lead member of the single entity shall be liable on any taxable supply made by the single entity in carrying on a business of dealing in securities or dealing in derivatives;
(g) any input tax allowable to any member of the single entity in carrying on a business of dealing in securities or dealing in derivatives shall be claimed by the lead member on behalf of the members of the single entity.
(4) For the purposes of this section—
(a) “Capital Markets Services Licence” has the meaning assigned to it in the Capital Markets and Services Act 2007 [Act 671];
(b) “Capital Markets Services Representative’s Licence” has the meaning assigned to it in the Capital Markets and Services Act 2007.
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).
