TAX317:

SALES TAXES
1
 Ability to:
• Determine concept and elements of the
scope of Sales Tax
• Determine the Sales Tax registration;
and responsibilities of Sales Tax
registrant
LEARNING
• Compute the amount of sales tax by
OUTCOMES applying the Sales Tax rate
• Determine the offences and penalties
related to Sales Tax
• GST (Repeal) Act 2018 and
continuance of liability under the GST
Act 2014

2
 HISTORY OF SALES TAX AND
SERVICES TAX
• Sales Tax and Services Tax are reintroduced in Malaysia effective
from 1/9/2018 to replace Goods and Services Tax (GST)
• They are commonly known as SST 2.0

1/9/2018:
31/3/2015:
1/6/2018: Implementation of
Abolishment 1/4/2015 31/8/2018:
Tax holiday 1) Sales Tax Act
of Sales Tax Implementation Abolishment
period 2018; 2) Services
Act 1972 & of GST Act of GST Act
where GST Tax Act 2018; and
Service Tax 2014 2014
@ 0% 3) GST (Repeal)
Act 1975
Act 2018

3
INTRODUCTION OF SALES TAX

• The imposition of Sales Tax are governed by:

1. Sales Tax Act 2018
2. Sales Tax (Amendment) Act 2018
3. Sales Tax (Amendment) Act 2019
4. Finance Act 2018
5. Sales Tax Regulations 2018, Sales Tax (Amendment)
Regulations 2018; Sales Tax (Amendment) Regulations 2018-
Corrigendum; Sales Tax (Amendment) Regulations 2019
6. Sales Tax (Determination of Sale Value of Taxable Goods)
Regulations 2018
7. Sales Tax (Compounding of Offences) Regulations 2018; Sales
Tax (Compounding of Offences)(Amendment) Regulations 2019
8. Sales Tax (Customs Ruling) Regulations 2018; Sales Tax
(Customs Ruling)(Amendment) Regulations 2018; Sales Tax
(Customs Ruling)(Amendment) Regulations 2019

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INTRODUCTION OF SALES TAX
• The imposition of Sales Tax are governed by:
9. Sales Tax (Rates of Tax) Order 2018; Sales Tax (Rates of Tax)(Amendment
1) Order 2018; Sales Tax (Rates of Tax)(Amendment 2) Order 2018; Sales
Tax (Rates of Tax)(Amendment 3) Order 2018;
10. Sales Tax (Imposition of Sales Tax in Respect of Special Areas) Order
2018; Sales Tax (Imposition of Sales Tax in Respect of Special
Areas)(Amendment) Order 2018; Sales Tax (Imposition of Sales Tax in
Respect of Designated Areas) Order 2018; Sales Tax (Imposition of Sales
Tax in Respect of Designated Areas)(Amendment) Order 2018
11. Sales Tax (Goods Exempted from Tax) Order 2018; Sales Tax (Goods
Exempted from Tax)(Amendment) Order 2018; Sales Tax (Goods
Exempted from Tax)(Amendment 2) Order 2018; Sales Tax (Goods
Exempted from Tax)(Amendment 3) Order 2018; Sales Tax (Goods
Exempted from Tax)(Amendment 4) Order 2018;
12. Sales Tax (Exemption from Registration) Order 2018
13. Sales Tax (Person Exempted from Payment of Tax) Order 2018; Sales Tax
(Person Exempted from Payment of Tax)(Amendment) Order 2018; Sales
Tax (Person Exempted from Payment of Tax)(Amendment 2) Order 2018;
Sales Tax (Person Exempted from Payment of Tax)(Amendment) Order
2019
14. Sales Tax (Total Sale Value of Taxable Goods) Order 2018

5
 WHAT IS SALES TAX?

• s 8(1) of Sales Tax Act 2018 → Sales Tax is a single stage

tax charged and levied on all taxable goods:
1. Manufactured in Malaysia by a registered manufacturer
upon sold, used or disposed by him
2. Imported into Malaysia by any person upon importation

• Sales Tax is a form of indirect tax, imposed on consumers

and collected by registered manufacturers and that
registered manufacturers are accountable to the Royal
Malaysian Customs (RMC).

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 WHAT IS SALES TAX?
Goods which are NOT stated
TAXABLE GOODS under the list of goods
exempted from sales tax

MANUFACTURED IN MALAYSIA
by registered manufacturers IMPORTED INTO MALAYSIA by
(include subcontractor any person
manufacturer

Upon the taxable manufactured goods: Is charged sales

tax Upon importation
Sold, Used, Disposed

Registered manufacturers to the buyer:

Charged by
Trading company, Wholesaler, RMC on the importer
Distributor, Customer

Invoice + Sales tax 10% Documentation K1 Form 7

 WHAT IS SALES TAX?
• Taxable Goods
 All goods are subjected to sales tax EXCEPT those
classified under exemption list specified in Schedule A of
Sales Tax (Goods Exempted from Tax) Order 2018 [PU(A)
219/2018, PU(A) 228/2018, PU(A) 234/2018, PU(A)
253/2018, PU(A) 404/2018]

8
 WHAT IS SALES TAX?
• Taxable Person
o Refers to a manufacturer (including subcontractor
manufacturer) of taxable goods in Malaysia who is liable to
register for sales tax when his annual sales turnover of
taxable manufactured goods exceeds the threshold of
RM500,000.
o Refers to any person who imported taxable goods into
Malaysia.
 The meaning of Malaysia excludes:
 Designated Areas [PU(A) 206/2018, PU(A)92/2019]; and
 Special Areas [PUA(A) 207/2018, PUA(A)401/2018]
• The meaning of Sales include:
• Barter
• Disposal
• Consignment
• Delivery of goods under any conditions
• Gift
• Donation
• Exchange
• Sample
• Destroyed
• Hire purchase / Leasing
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 WHAT IS SALES TAX?
• The meaning of manufacture:
A.Processed goods (other than petroleum products)
1.Manufacturing process → the conversion by manual or mechanical
2.Materials → organic or inorganic materials
3.Into new products by distinction of → size, shape, composition, nature
or quality of such materials
• Include assembly of parts into machinery/other products
• Excludes installation of machinery / equipment for purpose of
construction
B.Petroleum products
 Process of refining that includes the separation, conversion,
purification, and blending of refinery streams or petrochemical streams
C.Minister’s decision shall be final (in any questions to the
meaning of manufacture)

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 DESIGNATED AREAS & SPECIAL AREAS
DESIGNATED AREAS (DA) SPECIAL AREAS (SA)

s 2 defines DA as Langkawi, Labuan, Tioman s 2 defines SA as any free zone, licensed

and Pangkor (Pangkor is included in Sales warehouse, licensed manufacturing
Tax (Amendment) Act 2019 dated warehouse and the Joint Development Areas
28/6/2019. The definition of DA consists of
Langkawi, Labuan, Tioman and Pangkor
takes effect from 1/1/2020)
1. Taxable goods imported into DA/SA from Malaysia or other places a place outside
Malaysia – exempted from sales tax except importation of:
a) Wine, spirit, beer, malt liquor, tobacco and a) Wine, spirit, beer, malt liquor, tobacco and
tobacco products into designated areas tobacco products into Tasik Kenyir Duty
(deleted in PU(A) 92/2019 wef 27/3/2019) Free Area;
b) Marble and anchovies into Langkawi; and b) Goods specified in Schedule A of the
c) Motor vehicles into Tioman order and to be used/consumed in the
free zone (eg, forklifts, crane, office
equipment, motor vehicle etc)
2. Taxable goods transported between the DA/SA are NOT SUBJECT to sales tax

3. Taxable goods transported from DA to SA/ from SA to DA are NOT SUBJECT to sales tax

4. Taxable goods transported from DA to Malaysia are treated as if the goods were
importation into Malaysia, therefore they are SUBJECT to sales tax
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 SALES TAX REGISTRATION
• A manufacturer of taxable goods in Malaysia is required to register
for sales tax when the threshold limit > RM500,000. The threshold
limit is by reference to the annual sales value of the taxable
manufactured goods in Malaysia for revolving 12 months period.
• There are 2 methods in computing annual taxable turnover:

Historical method Future method

• Based on the total sale value of • Based on the total sale value of
all taxable goods in current month all taxable goods in current month
+ 11 months immediately + 11 months immediately
preceding the current month succeeding the current month
• Due date for sales tax registration → not later than the last day of the
month following the month he is liable to be registered OR within one
month after being liable to register.
• Effective date of registration → first day of the following month (after
being registered)
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 SALES TAX REGISTRATION
• The revolving 12 months period is illustrated as
below:
Eg: Historical method
Not liable to register for sales tax
Previous 11 months (Sep18 – Jul19) Current month
because the annual turnover RM400k
RM300,000 (Aug19) [RM300k + RM100k] which is less than
RM100,000 RM500k
Not liable to register for
sales tax because the
Previous 11 months (Oct18 – Aug19) Current month annual turnover RM470k
RM320,000 (Sep19) [RM320k + RM150k]
RM150,000 which is less than
RM500k
Liable to register for sales tax because the
annual turnover RM600k [RM400k + RM200k]
Previous 11 months (Nov18 – Sep19) Current month
which exceeds RM500k. RM400,000 (Oct19)
The due date for registration = within one after RM200,000
being liable to register, latest by 30/11/2019
The effective date of registration = 1/12/2019 13
 SALES TAX REGISTRATION
• Eg: Historical Method
• Y Sdn Bhd Sales of taxable goods for Sep 2019 = RM100,000
• Sales of taxable goods for 11 months from Oct 2018 to Aug 2019 =
RM420,000
• The total sales turnover for current month (Sep 2019) + previous 11 months
(Oct 2018 – Aug 2019) = RM100,000 + RM420,000 = RM520,000 and this
amount exceeds RM500,000 threshold limit to register for Sales Tax.
Therefore, the taxable person should register for Sales Tax in Oct 2019 (from
1/10/2019 to 31/10/2019) which is not later than the last day of the following
month when the threshold limit > RM500,000. The registration would take
effect on the 1st day of the following month, which is 1/11/2019.
• Eg: Future Method
• X Sdn Bhd Sales of taxable goods for Sep 2019 = RM100,000
• Sales of taxable goods for future 11 months from Oct 2019 to Aug 2020 =
RM420,000
• The total sales turnover for current month (Sep 2019) + future 11 months (Oct
2019 – Aug 2020) = RM100,000 + RM420,000 = RM520,000 and this amount
exceeds RM500,000 threshold limit to register for Sales Tax. Therefore, the
taxable person should register for Sales Tax in Oct 2019 (from 1/10/2019 to
31/10/2019) which is not later than the last day of the following month when
the threshold limit > RM500,000. The registration would take effect on the 1st
day of the following month, which is 1/11/2019.
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 SALES TAX REGISTRATION
VOLUNTARY REGISTRATION:
A manufacturer who is not liable to register for sales tax (exempted from registration – sec
20) by virtue of
• Having a turnover of taxable goods below threshold of RM500,000; or
• Being exempted person for sales tax registration under Schedule A of Sales Tax
(Exemption from Registration) Order 2018
may apply to be registered under the Sales Tax Act 2018 subject to conditions and approval
by the Director General
EXEMPTION FROM REGISTRATION
There are 3 categories of person exempted from sales tax registration:
1. Manufacturers with annual taxable sales under threshold of RM500,000
2. Manufacturers who manufacture non-taxable goods
• Schedule A of Sales Tax (Goods Exempted from Tax) Order 2018 [PU(A) 219/2018]
to be read together with
• Sales Tax (Goods Exempted from Tax)(Amendment) Order 2018 [PU(A) 228/2018]
• Sales Tax (Goods Exempted from Tax)(Amendment 2) Order 2018 [PU(A) 234/2018]
• Sales Tax (Goods Exempted from Tax)(Amendment 3) Order 2018 [PU(A) 253/2018]
• Sales Tax (Goods Exempted from Tax)(Amendment 4) Order 2018 [PU(A) 404/2018]

3. Manufacturers with exempted manufacturing operations

 Schedule A of Sales Tax (Exemption from Registration) Order 2018 [PU(A)
208/2018]
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 SALES TAX REGISTRATION
CESSATION OF LIABILITY TO BE REGISTERED
• If the registered manufacturer:
1. Ceases to carry on the business of manufacturing taxable goods;
or
2. His total sale value of taxable goods in that month and the eleven
months immediately succeeding that month does not exceed
RM500,000; or
3. A new government order issued that exempts him from
registration
• The registered manufacturer may make a written request to cancel his
registration within 30 days from the date of cessation
• Upon approval of deregistration, the RMC will send a notification
and the effective date of deregistration will be stated in the
notification

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 ARTIFICIAL SEPARATION
• Separate businesses may be found closely bound one another through:
Financial link
• Financial support given
• Common financial interest

Economic link
• Same economic objective
• Business activities bring benefits to another
• Supplying to same circle of customers

Organisational link
• Common management
• Common employees
• Common premises
• Common equipment

• In this instance, RMC has the discretion to treat such businesses as single
taxable person for sales tax registration
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 ARTIFICIAL SEPARATION
• Eg: AY SB and ZY Manufacturing SB are two manufacturing companies with
common directors and shareholders. They are registered separately under
SSM. The administration and accounting departments handle the affairs for
both company at the same time. Zaid Yusoff is the major shareholder
providing the necessary finance to fund the manufacturing operations of the
two companies.
AY SB has an annual taxable turnover of RM210,000 while ZY
Manufacturing SB has an annual taxable turnover of RM430,000. To avoid
registering for sales tax, ZY Manufacturing SB decides to maintain its
existing turnover by transferring any new customers to AY SB.
Advise the sales tax implication from the above strategies.
• Answer:
AY SB and ZY Manufacturing SB are artificially separated but they are
closely bound to each other financially, economically and organisationally.
Thus, RMC has the power to deem them as a single person for sales tax
registration purpose. The annual taxable turnover = RM210k + RM430k =
RM640k which exceeds the threshold of RM500k. Therefore, they are
required to register as a sales tax registrant and charged 10% sales tax
upon issuing invoices for manufacturing goods sold.
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RESPONSIBILITIES OF SALES TAX
REGISTRANT
Register as Sales
Tax registrant
when the threshold
limit > RM500,000

Issue Sales Tax

Keep records for 7 invoice starting
years from the effective
date of registration

Submit sales tax

return (SST-02) & Charge sales tax
pay sales tax @ 10% on sales of
payable to RMC by taxable goods
due date
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 SALES VALUE
• Sales Value will determine the amount of sales tax. The Sales Value for:
1. MANUFACTURED GOODS FOR SALE IN ORDINARY
TRANSACTION
Sales Value = Transaction price at market value
2. MANUFACTURED GOODS FOR SALE TO RELATED PARTY
Sales Value = Transaction price at market value
Where the transaction price cannot be determined:
Sales Value (computed value) = Cost of raw materials employed in
manufacturing + Charges and expenses of manufacturing process +
General selling and marketing cost + Profit margin; OR
Sales Value (deducted value) = Sales price per unit by buyer – General
selling and marketing cost by buyer – Insurance and transportation charges
by buyer – Profit margin by buyer
3. MANUFACTURED GOODS FOR OWN USE, GIFT OR
DONATIONS
Sales Value = Transaction price at market value
4. IMPORTED GOODS
Sales Value = Value of taxable goods for customs duty purpose + Amount of
customs duty (e.g. import duty, if any) + Amount of excise duty (if any)

20
 SALES VALUE
Imported goods
Purchase price (invoice value) XXX
Purchases expenses (freight charges, XXX
insurance on goods, etc)
Total purchase value XXX
Custom duty (x%) or Import duty (x%) XX
Sales value for sales tax purposes XXX
Sales tax payable (x%) XXX

• For imported goods, processing cost is considered as “out-of-pocket “

expenses.
• Will not be part of imported values
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 SALES TAX RATE
• Sales tax rate of 10% → the GENERAL RATE

• Sales tax rate of 5% → is applicable for goods listed in the

First Schedule of Sales Tax (Rates of Tax) Order 2018 and its
amendment orders

• Sales tax rate of 0% → is applicable for exempted goods

listed in the Schedule A of Sales Tax (Goods Exempted from
Tax) Order 2018 and its amendment orders

• Petroleum products → are taxed at specific rates based on

Second Schedule of Sales Tax (Rates of Tax) Order 2018 and
its amendment orders

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 COMPUTATION OF SALES TAX

Sales tax shall For petroleum

be charged and Sales tax is due products –
levied at the at the time the based on the qty
fixed rate (10%, goods are sold, of goods sold,
SALES VALUE x
5% and 0%) by use or disposed used or disposed
Sales Tax Rate
reference to the of by a of, or imported at
sales value at registered the rate in force
the time the manufacturer at which sales
sales tax is due tax is due

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COMPUTATION OF SALES TAX
• Eg: GSB is a taxable person licensed under Sales Tax Act 2018. In January
2020, the company sold its manufactured goods as follows:
• RM280,000 sold to Jentayu Sdn Bhd in Kelantan
• RM50,000 sold to Salim Enterprise in Tioman
• RM100,000 sold to LSB, a subsidiary company of GSB. The normal selling
price is RM120,000.
• RM70,000 donated to Rumah Anak Yatim Kenanga. The normal selling price
is RM82,000
• RM8,000 for own use and gifts to employees. The normal selling price is
RM9,000.
In March 2020, the company imported goods into Malaysia. The goods are
subject to import duty of 20% and the followings are expenses related to the
goods:
• Purchase price RM195,000
• Freight RM1,700
• Insurance RM1,300
Required:
1. Determine the amount of sales value, sales tax, taxable period and due date
for payment of sales tax to RMC.
2. Illustrate the tax impact if GSB submit the sales tax return form and pay the
amount of sales tax on 15 May 2020
3. Illustrate the tax impact of GSB submit the sales tax return form and pay the
amount of sales tax on 31 October 2020

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 COMPUTATION OF SALES TAX
• 1) Answer for GSB for Sales Value and Sales Tax Payable:
Transactions Sales Value Sales Tax Rate Sales Tax
RM (%) RM
Sold of manufactured goods 280,000 10% 28,000
to a company in Kelantan
Sold of manufactured goods 50,000 0% because sold 0
to a business in Tioman in designated
areas
Sold of manufactured goods 120,000 (at market value since 10% 12,000
to subsidiary company sold to related company)
Donation of manufactured 82,000 (at market value since 10% 8,200
goods donated goods)
Manufactured goods for 9,000 (at market value since 10% 900
own use and gifts to used own goods and for gifts)
employees
Imported goods Import value = 195,000 + 10% 23,760
1,700+ 1,300) = 198,000
Sales value = Import value +
Import duty = 198,000 + 20%
(198,000) = 237,600
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 TAXABLE PERIOD (s 25)
• Refers to the period to account for sales tax. In one calendar year, there are 6 taxable
periods. Each taxable period is made up of 2 calendar months as follows:
Filing Frequency Taxable Period
First Taxable Period Bi-monthly beginning from Sept – Oct 2018
(1.9.2018-31.10.2018)
Subsequent Taxable Period Nov-Dec,
Jan-Feb,
Mar-Apr,
May-Jun,
Jul-Aug,
Sept-Oct
Specific Basis Subject to an approval from the Director General

• Sales tax shall be due at the time the manufactured goods are sold, used, disposed by
a registered manufacturer in Malaysia (accounted in taxable period based on invoice
date).
• A taxable person is required to:
1. Submit the sales tax return (SST-02) to RMC
2. Pay the sales tax payable to RMC (sales tax is computed on accrual basis)
Within ONE MONTH upon the expiration of the taxable period
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 TAXABLE PERIOD, SUBMISSION OF
SALES TAX RETURN & PAYMENT OF
SALES TAX
Submit sales tax

Within one month after

return even

expiration of taxable
though there is
no sales tax due
Bi-Monthly (MANDATORY)

period
Annual
≥ RM500,000 taxable
turnover
period

*Payment of
sales tax
(accrual basis)

• *The amount of sales tax charged has to be remitted to RMC even though
the payment may have not been paid by the customers
• Non-submission of sales tax return and no payment of sales tax due are
TWO SEPARATE OFFENCES
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 • 1) Answer for GSB for Taxable Period and Sales Tax Payable:

Transactions Taxable Period Due date for Payment of Sales Sales Tax
Tax RM
Sold of manufactured goods Jan – Feb 2020 31 Mar 2020 28,000
to a company in Kelantan
Sold of manufactured goods Jan – Feb 2020 Nil 0
to a business in Tioman
Sold of manufactured goods Jan – Feb 2020 31 Mar 2020 12,000
to subsidiary company
Donation of manufactured Jan – Feb 2020 31 Mar 2020 8,200
goods
Manufactured goods for own Jan – Feb 2020 31 Mar 2020 900
use and gifts to employees --------------------- --------------
Total sales tax payable 49,100

Imported goods Mar – Apr 2020 31 May 2020

Total sales tax payable 23,760

28
• 2) Answer for GSB if payment due on 31/3/2020 was made on 15/5/2020:

Transactions Taxable Due date for Payment of Sales Tax Sales Tax
• Answer for GSB: Period RM
Sold of manufactured goods Jan – Feb 31 Mar 2020 28,000
to a company in Kelantan 2020
Sold of manufactured goods Jan – Feb Nil 0
to a business in Tioman 2020
Sold of manufactured goods Jan – Feb 31 Mar 2020 12,000
to subsidiary company 2020
Donation of manufactured Jan – Feb 31 Mar 2020 8,200
goods 2020
Manufactured goods for Jan – Feb 31 Mar 2020 900
own use and gifts to 2020 --------------------- --------------
employees Total sales tax payable 49,100
Payment made on 15/5/2020
Late payment penalty:
First 30 days (1/4/2020 – 30/4/2020)
10% x RM49,100 4,910
Next 30 days (1/5/2020 – 30/5/2020)
15% x 49,100 7,365
--------------
Debt due to government 61,375
29
• 3) Answer for GSB if all payments are made on 31/10/2020:
Transactions Taxable Due date for Payment of Sales Tax Sales Tax
• TAXABLE PERIOD & PAYMENT OF
Answer for GSB:
Period RM
Jan – Feb 31 Mar 2020
Sold of manufactured goods
to a company in Kelantan
SALES
2020
TAX 28,000

Sold of manufactured goods Jan – Feb Nil 0

to a business in Tioman 2020
Sold of manufactured goods Jan – Feb 31 Mar 2020 12,000
to subsidiary company 2020
Donation of manufactured Jan – Feb 31 Mar 2020 8,200
goods 2020
Manufactured goods for own Jan – Feb 31 Mar 2020 900
use and gifts to employees 2020 --------------------- --------------
Total sales tax payable 49,100
Late payment penalty:
> 90 days (40%) 19,640
--------------
Debt due to government 68,740
Imported goods Mar – Apr 31 May 2020
2020 Total sales tax payable 23,760
Late payment penalty:
> 90 days (40%) 9,504
----------
Debt due to government 30
33,264
• Answer for GSB if payment due on 31/3/2020 was partially paid RM20,000 on
31/3/2020:
Transactions Taxable Due date for Payment of Sales Tax Sales Tax
• Answer for GSB: Period RM
Sold of manufactured goods Jan – Feb 31 Mar 2020 28,000
to a company in Kelantan 2020
Sold of manufactured goods Jan – Feb Nil 0
to a business in Tioman 2020
Sold of manufactured goods Jan – Feb 31 Mar 2020 12,000
to subsidiary company 2020
Donation of manufactured Jan – Feb 31 Mar 2020 8,200
goods 2020
Manufactured goods for own Jan – Feb 31 Mar 2020 900
use and gifts to employees 2020 --------------------- --------------
Total sales tax payable 49,100
31/3/2020 paid (20,000)
29,100
Payment made on 15/5/2020
Late payment penalty:
First 30 days (1/4/2020 – 30/4/2020)
10% x 29,100 2,910
Next 30 days (1/5/2020 – 30/5/2020)
15% x 29,100 4,365
--------------
31
Debt due to government 36,375
• Answer for GSB if payment due on 31/3/2020 was partially paid RM20,000 on 31/3/2020 &
RM10,000 on 1/5/2020:
Transactions Taxable Due date for Payment of Sales Tax Sales Tax
Period RM
Sold of manufactured goods Jan – Feb 31 Mar 2020 28,000
to a company in Kelantan 2020
Sold of manufactured goods Jan – Feb Nil 0
to a business in Tioman 2020
Sold of manufactured goods Jan – Feb 31 Mar 2020 12,000
to subsidiary company 2020
Donation of manufactured Jan – Feb 31 Mar 2020 8,200
goods 2020
Manufactured goods for own Jan – Feb 31 Mar 2020 900
use and gifts to employees 2020 --------------------- --------------
Total sales tax payable 49,100
31/3/2020 paid (20,000)
Outstanding on 31/3/2020 29,100
1/5/2020 paid (10,000)
Outstanding @ 1/5/2020 19,100
Late payment penalty:
First 30 days (1/4/2020 – 30/4/2020) 2,910
10% x 29,100
Next 30 days (1/5/2020 – 30/5/2020) 2,865
15% x 19,100 -------------
Debt due to government @ 1/5/2020 3224,875
 INVOICE
• A sales tax registrant is required to issue sales tax invoice when
making a sale of taxable goods to customers. The invoice must
contained the following information:
• Information is prescribed in Malay / English
• Invoice serial number
• Date of invoice
• Name, address and identification number of the registered manufacturer
• Name and address of the purchaser
• A description sufficient to identify the taxable goods sold
• Any discount offered
• For each description, distinguish the type, quantity of taxable goods and
amount payable excluding tax
• The amount payable excluding sales tax, the rate of sales tax and the
total sales tax chargeable shown as a separate amount
• The total amount payable inclusive of total sales tax chargeable; and
• Any amount expressed in currency other than RM shall also be
expressed in RM at the selling rate of exchange prevailing in Malaysia at
the time of sales of taxable goods.
33
DEBIT NOTE AND CREDIT NOTE

Once an invoice is issued for the sales of manufactured goods, any

shortfall or adjustment to the value of the sales has to be adjusted by
way of debit note or credit note:

Debit note Credit note

• issued when the amount • issued when the amount
previously invoiced is previously invoiced is
increased due to an addition reduced or a transaction is
of sales tax to be paid for cancelled (returned goods or
any price adjustment discount given to customers)

34
 EXPORTED GOODS

Sch A – Item 57 –
Locally
manufactured
Sch A – Item 56 – goods purchased
all goods exported for export
from Malaysia
Taxable goods (exempted)
exported to a
place outside M’sia
by a registered
manufacturer are
exempted from
sales tax

35
 SALES TAX FACILITIES
Exemption System
• 3 types of exemption available:
• (1) Goods exempted from sales tax [refer to slide 7]
• (2) Persons exempted from registration [refer to slide 13]
• (3) Persons exempted from paying sales tax [refer to slide 31]
• For item (1) and (2), the person do not need to apply certificate of
exemption. But for item (3), the person has to apply certificate of
exemption. By presenting the exemption certificate during local purchase
or importation, sales tax amount will not be collected by the registered
supplier or RMC
Refund System
• If a registered manufacturer or importer makes a sale of taxable goods to
a person who holds exemption certificate, he is allowed to claim refund on
the sales tax paid upon his purchase or importation.
• The refund application is made within 1 year after the sale.
Deduction System
• Wef 1/1/2019, a registered manufacturer can apply for deduction of sales
tax in respect of taxable goods which are raw materials, components or
packaging materials used solely in the manufacturing of his taxable goods
• For any taxable goods subject to 5% sales tax → deduction of 2% from
total value of the goods purchased
• For any taxable goods subject to 10% sales tax → deduction of 4% from
total value of the goods purchased
36
PERSONS EXEMPTED FROM
PAYING SALES TAX
Schedule A of the Sales Tax (Person Exempted from Sales Tax) Order 2018:
YdPA, YdPN/ state ruler, Federal or State Govt department, local authority, duty free
shops, Inland Clearance Depot etc.

Schedule B of the Sales Tax (Person Exempted from Sales Tax) Order 2018:
Non-registered manufacturer who acquire raw materials, components,
packaging to be used solely in the manufacturing of specific goods

Schedule C of the Sales Tax (Person Exempted from Sales Tax) Order 2018:
Registered manufacturer on the acquisition of raw materials, components and
packaging materials to be used in manufacturing of taxable goods

Exemption under Section 35 of the Act:

Specific exemption (holds certificate of exemption) & exemption by order of the
Minister

37
 OFFENCES & PENALTIES
Offences Penalties
1. Failure to register for sales tax within 1 month when [s 13(5)]:
becomes liable to be registered [s 13(1)] i. Fine < RM30k; or
ii. Imprisonment < 2 years; or
iii. Both
2. Failure to issue invoice: [s 21(4)]:
• In Malay/English with prescribed criteria [s 21(1)] i. Fine < RM30k; or
• By a registered manufacturer on taxable goods [s ii. Imprisonment < 2 years; or
21(2)] iii. Both
• Sales tax collected in addition to the price [s 21(3)]
3. Failure to furnish SST-02 return: [s 26(7)]:
• Within 1 month from end of taxable period i. Fine < RM50k; or
• Within 30 days from end of the varied taxable ii. Imprisonment < 3 years; or
period iii. Both
• Within 30 days from the cessation of liability to be
registered
• Of any sales tax due and payable on stocks which
has been sold

38
 OFFENCES & PENALTIES
Offences Penalties
4. Furnishing incorrect return [s 26(7)]:
i. Fine < RM50k; or
ii. Imprisonment < 3 years; or
iii. Both
5. Failure to pay sales tax due and payable [s 26(5)] [s 26(9)]: without prosecution
i. Late payment between 1-
30 days, 10% penalty
ii. Late payment between 1-
60 days, 25% penalty.
Additional 15% for the
second 30 days
iii. Late payment between 1-
90 days, penalty 40%
(max). Additional 15% for
the third 30 days

[s26(8)]: with prosecution

i. Fine < RM50k; or
ii. Imprisonment < 3 years; or
iii. Both 39
 GST (REPEAL) ACT 2018
• GST Act 2014 is repealed and ceased operation from 1/9/2018. Although it
has repealed, liabilities and penalties incurred for non-compliance remain in
force.
• This means:
1. The GST registrant must submit the last GST return for August 2018; make
payment of GST due and payable; and complete final claim of GST input tax
within 120 days from 1/9/2018, which is due on 29/12/2018.
2. Any person who is a non-taxable person under s 42 of GST Act 2014 but
liable to submit GST return for August 2018 must submit the last return; and
make payment of GST due and payable within 30 days from 1/9/2018, which
is due on 30/9/2018.
3. Any GST registrant who is eligible for GST input tax refund will be refunded
within 6 years from 1/9/2018, which means the refunded period is between
1/9/2018 and 31/8/2024.
• All the records relating to GST implementation by GST registrant must be
kept for 7 years (until 31/12/2025), even after the repeal of GST Act 2014.
• Although the GST Act 2014 had repealed, any non-compliance to the
GST Act 2014 (e.g. error in GST submission, late submission, late
payment), would continue to attract penalties.
• The non-compliance to the Sales Tax Act 1972 and Services Tax Act
1975 would also continue to attract penalties even after the
implementation of Sales Tax Act 2018 and Services Tax Act 2018.
40
EXAMPLE OF CASE
RELATING TO
SALES TAX 41
 EXAMPLE 1-Q& A
BCC Sdn Bhd involves in a business of manufacturing ceramic products in Perak. The
company closes its account on 31 August annually. By 30 September 2019, due to
higher demand of its products, BCC’s monthly turnover for the taxable goods has
reached RM250,000 per month and the sales value of taxable goods is expected to
increase by RM300,000 by the end of 31 August 2020.

Required:
1. Determine the requirement of BCC to register for sales tax under Sales Tax Act
2018
• BCC is required to register as taxable person under Sales Tax Act 2018 as its
annual sales value of the taxable manufactured goods in Malaysia based on
future method (current month: Sep 2019 = RM250k + future 11 months: Oct 2019
to Aug 2020 = RM300k) = RM550,000 has exceeded the threshold of
RM500,000. Thus, BCC is required to register for sales tax latest by 31/10/2019.
The registration is effective from 1/11/2019.
2. Determine the first taxable period for BCC and the due date for payment of sales
tax to RMC in respect of the first taxable period.
• The first taxable period for BCC is from 1/11/2019 - 31/12/2019 (effective first day
of the following month after being registered (not later than 31 October 2019)
• Due date for payment sales tax for taxable period of Nov 2019 to Dec 2019 is by
31 January 2020
42
 EXAMPLE 2-Q & A
Mr Tony imports taxable goods from Korea to be sold in Malaysia. The
imported goods are subject to an import duty of 20%. On 24 October
2019, the amount of taxable goods imported amounted to RM250,000.
Required:
Determine the sales value for the imported goods above.
RM
Taxable goods (invoice value) 250,000
Add: Import duty 20% (20% x 250,000) 50,000
Value for sales tax purposes 300,000

43
 EXAMPLE 3-Q & A
Camry Sdn Bhd imported goods from Vietnam. The cost of purchase
was RM170,000. Freight charges and insurance on goods were
RM2,500 and RM3,000 respectively. The goods arrived at Port Klang
on 20 January 2020. The custom duty was 25%. Compute sales tax
payable by Camry Sdn Bhd (assume sales tax is 10%)
Required:
Determine the sales value for the imported goods above.
RM
Purchase price 170,000
Freight charges 2,500
Insurance on goods 3,000
175,500
Add: Custom duty 25% (25% x RM175,500) 43,875
Value for sales tax purposes 219,375
Sales tax payable at 10% 21,937.50 44
 EXAMPLE 4-Q
Kulim Sdn Bhd, a registered manufacturer of household products in
Shah Alam, sold the following taxable goods in November 2019:

Sales value (RM)

To a hotel in Tioman 70,000
To a supermarket in Philippines 220,00
To a departmental store in Sabah 350,000

Its taxable period started from September 2019. The applicable tax rate
is 10%
Required:
1. Compute the amount of sales tax payable (if any) by Kulim Sdn Bhd,
in respect of each of the above transactions
2. State when the sales tax is due for payment by Kulim Sdn Bhd
3. State the penalty in terms of percentage of the sales tax payable and
amount assuming Kulim Sdn Bhd paid the sales tax on the 50th day
after the last date for payment
45
 EXAMPLE 4-A
1. Compute the amount of sales tax payable (if any) by Kulim Sdn Bhd,
in respect of each of the above transactions
Sales tax is imposed on taxable goods used in Malaysia. Taxable
goods sold to Designated Areas (Langkawi, Labuan, Tioman and
Pangkor) is exempted from sales tax. Exported goods, i.e. goods
sold to outside Malaysia will also not chargeable to sales tax
Sales tax in: Sales tax payable (RM)
Tioman Nil
Philippines Nil
Sarawak (10% x 350,000) 35,000

2. State when the sales tax is due for payment by Kulim Sdn Bhd
Taxable period: 1/11/2019 - 31/12/2019
Due date for payment of sales tax: 31 January 2020
46
 EXAMPLE 4-A
3. State the penalty in terms of percentage of the sales tax payable
and amount assuming Kulim Sdn Bhd paid the sales tax on the 50th
day after the last date for payment
Due date: 31/1/2020 Rate of penalty
1/2/2020 - 2/3/2020 (First 30 days) 10%
3/3/2020 - 1/4/2020 (Second 30 days) 15%
25%
Penalty for late payment of sales tax
(sales tax payable: 35,000 x 25%) 8,750

47