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Indirect Tax Chat – June 2020
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Indirect Tax Chat Keeping you updated on the latest news in the Indirect Tax world June 2020
Indirect Tax Chat – June 2020
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Issue 6.2020
Quick links: Contact us - Our Indirect Tax team
Key takeaways:
1. Final cut-off for Goods and Services Tax (GST) adjustments and reporting
2. FAQ on expedited GST Refunds
3. Tax exemptions for the tourism industry
Indirect Tax Chat – June 2020
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Greetings from Deloitte Malaysia’s Indirect Tax team
Greetings readers, and welcome to the June 2020 edition of our Indirect Tax Chat. The Ministry of Finance (MOF) issued a statement on 15th June 2020, regarding expediting GST refunds. The MOF has agreed for the Royal Malaysian Customs Department (RMCD) to implement a ‘pay first and audit later for selected companies’ approach. However, much of the critical details on implementation are unclear, including how RMCD will determine which taxpayers will be prioritised for refunds. The statement as well as additional information released by RMCD were covered in our alert, which you may access here. The RMCD has extended certain indirect tax payment deadlines that were statutorily due on 31st March, 30th April, or 31st May to 30th June 2020. The announcement by the RMCD was released on 29th May in the national language, which can be accessed here. The RMCD also released a separate announcement notifying taxpayers that late payment penalties would be auto-generated by the system, even though an extension has been granted, but these would be remitted by RMCD as soon as possible. This announcement can be accessed here. We would ask that you observe the published deadline and ensure prompt filing and payment. The Prime Minister YAB Tan Sri Dato’ Haji Muhyiddin Yassan on 5th June 2020 unveiled the short-term economic recovery plan (PENJANA) to boost the economy which included a number of indirect tax concessions. More details are available here. Separately, here are some recent news which may interest you:
Malaysian Automotive Association president Datuk Aishah Ahmad said the sales tax exemption announced in the Economic Recovery Plan could help reduce cost, with lower selling prices, combined with offers and discounts from car dealers. The exemption of sales tax for locally assembled cars and the lowering of the tax for imported cars will see buyers saving several thousand ringgit to more than RM10,000 in their purchases from June 15 until the end of the year. For more information, please click here and here.
We hope you find this month’s tax chat informative, and that you continue to stay safe and well.
Best regards, Tan Eng Yew
Indirect Tax Leader
Indirect Tax Chat – June 2020
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1. Final cut-off for Goods and Services Tax (GST) adjustments and reporting
Despite approaching the 2nd anniversary of the GST repeal, the reporting and payment obligations for many former GST Registrants have not ceased. However, the requirements to continue to report and pay tax will cease by 31 August 2020. Businesses should take note of this requirement and ensure that their final reporting is done in accordance with the guidelines released by RMCD. Below is a quick recap on some of the adjustments as per the GST Guide on Tax Invoice, Debit Note, Credit Note and Retention Payment After 1st September 2018:-
A business who made a taxable supply of goods or services before 1 September 2018 may issue a tax invoice after 1 September 2018 and account for tax in the final return. Any GST due and payable and not yet accounted for, shall be accounted and paid for by amending the final GST return.
Where there is a change in the consideration for a taxable supply made before 1 September 2018 and a debit note is subsequently issued by the supplier who is a registered person, any GST which has been accounted for in any return shall be adjusted accordingly. Where the debit note is issued after submission of the final return, the adjustment shall be made in the month which the debit note is issued, by amending the final return to increase the amount of output tax.
In the case there is a change in the consideration for a taxable supply made before 1 September 2018 and subsequently a credit note is issued by the supplier who is a registered person, any GST which has been accounted for in any return may be adjusted accordingly. Where the credit note is issued after 29th December 2018, an adjustment shall be made, on or before the last day of the month in which the credit note is issued by amending the final return to reduce the amount of output tax. Similarly, where the recipient receives the credit note after submission of his final return, the recipient shall reduce the amount of input tax by amending his final return, on or before the last day of the month in which the credit note is received.
A business is not allowed to issue a credit note or debit note and make GST adjustment after 31 August 2020, although there is a change in consideration for the taxable supplies. This sentiment is echoed in item 19 of the GST Guide on Declaration and Adjustment After 1st September 2018, which states that any GST adjustment shall be made before 1 September 2020, and that the business is not required to adjust its output or input tax for any changes taking place from 1 September 2020 onwards.
Brought to you by:
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Larry James Sta Maria Tax Director KL Office
Patrick Ng Tax Assistant KL Office
Indirect Tax Chat – June 2020
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2. FAQ on expedited GST refunds Along with the MOF announcement and information released by the RMCD which we covered in our alert here,
the RMCD also released an FAQ in the national language, available here. Salient points in the FAQ are as below:
1. Where can I check the status of my GST refund? A: You may check the status of the GST refunds through: a) Taxpayer Access Point (TAP) system; or b) email [email protected]; or c) visit the nearest RMCD station or call the general Customs hotline at 1-300-88-8500 or email
2. I have moved my business address to a new location. Do I need to update my GST registration? A: Yes, all business information such as telephone number, bank account, authorised persons must be updated in TAP. This information is important for desk review (if required) and for the purpose of GST refund.
3. I have an issue accessing my GST account in TAP. What should I do? A: The company may reactivate the TAP credentials by calling RMCD at 1-300-88-8500 or email [email protected], or visit the nearest RMCD station (Internal Taxes Branch).
4. Why have I not received my GST refund claims? A: All GST refunds are subject to desk review, audit or investigation. Payment of GST refunds will be made within 6 years from 1 September 2018. This is in line with section 8 of the Goods and Services (Repeal) Act 2018.
5. What are the actions taken by RMCD to speed up the GST refund process? A: For GST refund claims below RM100,000, the GST refund payment will be made as soon as the desk review is completed. Companies or GST refund claimants may still be audited at any time within 6 years from 1 September 2018. For GST refund claims RM100,000 and above, the refund claim is subject to a risk rating process.
Once the claim passes the risk rating process,, the GST refund will be paid in full after the desk review. An audit may commence at any time after the GST refund payment is made.
If the claim does not pass the risk rating process,, 90% of the GST refund may be paid from the amount outstanding as at 1 January 2019, after the desk review. The remaining 10% will be paid after the conclusion of the field audit. Alternatively, companies have the choice to receive GST refund payment in full if they produce a bank guarantee amounting to 10% of the GST refund claim and a letter of undertaking.
6. If I do not use a bank guarantee, can I receive the GST refund payment in full?
A: No, the bank guarantee method is an alternate way to receive your full GST refund claim even if the audit is not completed.
Indirect Tax Chat – June 2020
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7. How can I get more information on the use of a bank guarantee and letter of undertaking? A: You may email [email protected] for more information. The application to use a bank guarantee and letter of undertaking will be processed by the Operations Control and Refund Branch of the Internal Taxes Division of the RMCD head office.
8. How is the bank guarantee value determined in order to be able to receive the GST refund in full? A: The bank guarantee value should be 10% of the total amount of GST refund claim outstanding as at 1 January 2019. To get the exact value, you may enquire by emailing [email protected].
9. When will RMCD conduct their audit on my company? A: According to section 8 of the Goods and Services (Repeal) Act 2018, the audit can be done within 6 years from 1 September 2018.
10. Where can I get more information on the GST refunds? A: More information can be obtained by enquiring with the Operations Control and Refund Branch of the Internal Taxes Division of RMCD’s head office through [email protected].
Deloitte’s comments The provision of multiple sources of contact for further information is useful. However, certain matters still need to be clarified such as how the risk rating or their desk review process is undertaken. We hope this will be clarified soon, and that RMCD will be able to complete the GST refunds by the December 2020 deadline. Brought to you by:
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Wong Poh Geng Tax Director KL Office
Lekhashinii Nadarajan Tax Assistant KL Office
Indirect Tax Chat – June 2020
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3. Tax exemptions for the tourism industry
In the first half of 2019, the Malaysian Tourism industry contributed RM 41.69 billion to the country’s revenue,
accounting for 7% of the country’s economy. However, with nations imposing travel restrictions as a way to curb
infections during the pandemic, this industry was heavily affected in the first half of 2020.
In an effort to protect this crucial industry, the Malaysian government has provided two tax exemptions on
accommodation services, in particular to the hotel industry.
Service tax exemption on accommodation services The RMCD issued Service Tax Policy No. 9/2020 in March 2020 which we covered in our previous Indirect Tax Chat, accessible here. With the announcement of PENJANA, the RMCD issued Service Tax Policy 9/2020 (Amendment No. 1) on 17 June 2020 which seeks to further improve the previously issued service tax exemption. 1) The exemption in the original policy was for a period of 6 months, from 1 March 2020 to 31 August 2020,for
services under Group A, First Schedule, Service Tax Regulations 2018 (‘STR’) which is as follows: i) accommodation premises operators registered for service tax are exempted from charging service
tax on accommodation and other services; and ii) any individual acquiring accommodation or other services from any operators of accommodation
premises registered for service tax is exempted from paying service tax.
Amendment
i) The amendment has extended the exemption period to be from 1 March 2020 to 30 June 2021.
2) Paragraph 5.5 of the original policy mentioned that Tourism Tax (TTx) is not exempted and is to be charged as usual.
Amendment
i) The amendment now includes exemption of TTx. Accommodation service providers will now not need to charge TTx from 1 July 2020 to 30 June 2021.
3) Paragraph 6.2 of the original policy provided for the transitional rule where services occurring on 31 August 2020 and ending on 1 September 2020 are exempted from service tax.
Amendment
i) The amendment has modified this paragraph to reflect the revised exemption period. Services that start on 30 June 2021 and end on 1 July 2021, will be exempted from service tax.
Indirect Tax Chat – June 2020
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Tourism tax exemption Another indirect tax measure provided under PENJANA is the exemption for tourism tax, as announced by the Prime Minister on 5 June 2020. Subsequently the RMCD released an announcement and a FAQ, providing more information on this. Key points of the announcement and FAQ are as follow: 1. Tourism tax exemption for foreign tourists who stay at registered premises from 1 July 2020 to 30 June 2021.
2. Although no tourism tax is to be charged during the exemption period, registered operators are still subject
to the Tourism Tax Act 2017 and the Tourism Tax Regulations 2017.
3. Operators need to submit the TTx-03 return according to their taxable period under subsection 19(5) of the Tourism Tax Act 2017 even though no tourism tax is to be charged on foreign tourists: a) Account for and pay the tourism tax levied on foreign tourists that was collected before the exemption
period, or any tourism tax not collected after 12 months from when they were due. b) Total amount of tourism tax exempted must be stated in field 7 of the TTx-03 tax return. c) Operators must state that tourism tax is exempted in their invoices to foreign tourists.
4. No application for the tourism tax exemption is required.
5. In the case where a foreign tourist checks in on 30 June 2020 and checks out on 1 July 2020, tourism tax shall
be levied.
6. In the case where a foreign tourist checks in on 30 June 2021 and checks out on 3 July 2021, only the stay on 30 June is exempted from tourism tax. The stay on 1 and 2 July 2021 shall be subject to tourism tax.
For more information, you may access the announcement and FAQ which are only available in the national language here and here. Deloitte’s comments The exemptions announced is definitely a welcomed one, as the industry currently faces a challenging period because of the Covid-19 pandemic.
Brought to you by:
Wendy Chin Senior Manager KL Office
Jonathan Lai Supervisor KL Office
Indirect Tax Chat – June 2020
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We invite you to explore other tax-related information at: http://www2.deloitte.com/my/en/services/tax.html To subscribe to our newsletter, please click here. Back to top
Indirect Tax Chat – June 2020
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Contact us – Our Indirect Tax Team
Tan Eng Yew
Senthuran Elalingam Indirect Tax Leader [email protected]
Global Indirect Tax Clients & Industries Leader [email protected]
+603 7610 8870 +603 7610 8879
Wong Poh Geng
Chandran TS Ramasamy Director Director [email protected] [email protected] +603 7610 8834 +603 7610 8873
Larry James Sta Maria
Irene Lee
Director Associate Director [email protected] [email protected] +603 7610 8636 +603 7610 8825
Nicholas Lee
Wendy Chin Associate Director Senior Manager [email protected] [email protected] +603 7610 8361 +603 7610 8163
Indirect Tax Chat – June 2020
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Name Email address Telephone
Leong Wan Chi Manager
[email protected] +603 7610 8549
Eliza Azreen Kamaruddin Manager
[email protected] +603 7610 7271
Atika Hartini Suharto Manager
[email protected] +603 7610 7986
Emeline Tong Assistant Manager
[email protected] +603 7610 8733
Naresh Srinivasan Assistant Manager
[email protected] +603 7650 6459
Other offices
Name Email address Telephone
Susie Tan Johor Bahru and Melaka
[email protected] +607 268 0851
Ng Lan Kheng Penang
[email protected] +604 218 9268
Lam Weng Keat Ipoh
[email protected] +605 253 4828
Philip Lim Kuching and Kota Kinabalu
[email protected] +608 246 3311
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Indirect Tax Chat – June 2020
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Indirect Tax Chat – June 2020
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