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The tax is also imposed on taxable goods imported into the Federation Sales tax is imposed on imported goods at the point of entry. In the case of locally manufactured goods, sales tax is charged and levied when such goods are sold or disposed of by the manufacturers. Taxable goods are goods of a class or kind not for the time being exempted from sales tax. The locations of the sales tax offices as well as the districts served are specified in the Second Schedule of the Sales Tax Regulations There is no fee prescribed for the issuance of a sales tax licence.
The sales tax licence is in the prescribed Form CJ No. If the manufacturer carries on business in several places, such places of business must be included in the sales tax licence and a copy of the licence is to be similarly displayed at each place of business.
Sales and service tax in malaysia pdf merge
Generally, the licensed manufacturer will continue to be licensed until the licence is revoked. The sales tax licence may be revoked for the following reasons:. Sales tax licence may be revoked under the following circumstances:. In other cases, the sales tax licence may need to be amended to accommodate changes that occur in the course of business.
Sales and Services Tax bills pass first hurdle
It is therefore the duty of the licensed manufacturer to forward the sales tax licence to the Sales Tax authorities for amendment in the following cases:. Exemption From Licensing: The Sales Tax Act provides the Minister the power to exempt certain persons and manufacturing operations from the licensing requirement. The Schedule A of the Sales Tax Exemption from Licensing Order stipulates that manufacturers with an annual sales turnover of taxable goods not exceeding RM, are exempted from the requirement of applying for a sales tax licence.
However, such manufacturers are required to apply for a certificate of exemption from licensing. The application must be made in the prescribed Form C. The certificate of exemption from licensing is in the prescribed Form C. The holder of a certificate of exemption from licensing is required to submit the application for renewal of such certificate within 14 days of the expiry of the current certificate. When the sales value of the taxable goods manufactured during any one period of exemption has reached or is about to reach the threshold, it is the duty of the holder of the certificate of exemption from licensing to notify the senior officer of sales tax of such matter.
In addition, the holder of the certificate of exemption from licensing is required to surrender the current certificate and submit an application to be licensed. Being not a taxable person, the holder of the certificate of exemption from licensing is not required to charge sales tax on the sales of taxable goods manufactured by him. However, he is required to pay sales tax on taxable raw materials and components used in the manufacture. Section 14 of the Sales Tax Act was amended with effect from 17 October to allow a person, who is exempted from licensing, to apply to be licensed in order to enjoy the facilities provided under the Sales Tax Act This provision is especially useful to manufacturers who manufacture taxable goods for export or are engaged in sub-contracting arrangements with licensed manufacturers.
Maintenance Of Records: Every taxable person is required to issue invoices in respect to transaction relating to the sales of taxable goods.
Such invoices shall be prepared in the national language or in English.
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The amount of sales tax payable is to be stated separately to the value of the taxable goods sold and be recovered by the taxable person from the purchaser. The Sales Tax Act also makes provisions for the production of invoices by computer. In addition, it is the duty of every taxable person to maintain full and true records of all transactions involving the sales of taxable goods.
Such records or books of accounts must be maintained in Romanised Malay or in English. If records or books of accounts are kept in a language other than in Romanised Malay or in English, the senior officer of sales tax may request a translation be provided at the expense of the taxable person. Records or books of accounts are to be preserved for a period of six years from the latest date to which such records relate. Failure to comply with such requirement constitutes an offence under section 43 of the Sales Tax Act and the offender is liable to a fine not exceeding RM5, or an imprisonment for a term not exceeding 12 months or to both such imprisonment and fine.
Submission Of Sales Tax Returns: Sales tax returns are to be submitted according to taxable period which is defined as two calendar months. Such returns, in the prescribed Form JKED 3, must be delivered by a taxable person to the sales tax office within 28 days after the end of each taxable period. The taxable persons shall furnish, among others, the following particulars in the sales tax returns:. Every licensed manufacturer is required to submit a sales tax returns whether or not any taxable goods are manufactured, sold, disposed of otherwise than by sales, disposed of otherwise than by use as material in manufacture and whether or not any sales tax is payable for such taxable period.
Sales tax returns may be delivered to the sales tax office personally or by post. A taxable person who fails to submit sales tax returns within the stipulated period shall be guilty of an offence under section 43 of the Sales Tax Act and shall be liable to a fine not exceeding RM5, or an imprisonment for a term not exceeding 12 months or to both such imprisonment and fine.
In the case of locally manufactured goods, sales tax is levied on the sales value of the taxable goods. As such, it is pertinent that the determination of sales value complies with the provisions under the Sales Tax Act In this connection, the Sales Tax Rules of Valuation Regulations specifies the rules for the determination of sales value of locally manufactured goods.
Generally, the transaction value of the taxable goods forms the basis of the sales value of such taxable goods.
With regards to taxable goods imported into Malaysia for home consumption, the sales value of the taxable goods represents the sum of the following amounts:. Section 15 of the Sales Tax Act empowers the Minister to fix, by Order published in the Gazette, the rates of sales tax to be imposed on the taxable goods.
Currently, the following Orders which prescribe the various rates of sales tax are in force:.
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The said Order has been amended several times to accommodate the changes in the sales tax structure. This Order contains the following schedules:. The incidence of tax is provided under section 22 of the Sales Tax Act In the case of locally manufactured taxable goods, the sales tax chargeable is due at the time the taxable goods are:. Such sales tax which falls due during any taxable period is to be paid to the sales tax office within 28 days from the expiration of that taxable period.
Such payment may be made by delivering or posting to the sales tax office:. Payment, made by post, received after the last date stipulated for such payment is deemed to be received within the stipulated time, provided that such payment has been posted on or before the last stipulated date.
Accordingly, penalty for late remittance will not be imposed.
Malaysia to introduce sales and service tax after effectively scrapping GST
In the event that a licensed manufacturer fails to remit sales tax to the sales tax office within the stipulated time, he shall be guilty of an offence against the Sales Tax Act and punishable under section 43 of the same Act.
In addition, a penalty shall be imposed on the amount of sales tax that remains unpaid after the last stipulated date. The computation of penalty is as follows:.
In the event that such licensed manufacturer is unable to settle the unpaid amount in a single payment, he may apply to the Director General of Customs who may allow the unpaid sales tax to be paid by instalments on such amounts and on such dates he may determine. In this case, penalty would not be imposed on such amount of sales tax from the date of allowance.
In addition the whole outstanding amount and the surcharge shall become due and payable on the date of default in payment. Deduction Of Sales Tax: In the course of business, it is not uncommon that discounts on sales value of taxable goods are granted to purchasers subsequent to such sales. There are also instances where the taxable goods sold are returned by the purchasers. In such cases, the licensed manufacturer may deduct such amount of sales tax paid in respect to the discounts granted and the returned goods from the amount of sales tax accounted for in the return furnished by him, subject to the condition that a credit note has been issued to the purchaser.
In the case of returned goods, the deduction of sales tax may be allowed provided the goods are returned within 3 months from the date of sale on account of wrong quantity, poor or defective quality or un-contracted goods. In all cases, the credit notes shall show the following particulars:.
In the case of locally manufactured taxable goods, sales tax is levied and charge on the finished goods when such finished goods are sold or disposed of. The raw material or components use in the manufacture of taxable goods are free from sales tax. In order to uphold the single-stage tax concept, various facilities are provided under the Sales Tax Act to allow the licensed manufacturers to acquire taxable raw material and components used in the manufacture of taxable goods free from sales tax.
The existing mechanism to acquire tax-free raw material and components, among others, include the following:. This facility is provided under section 9 of the Sales Tax Act Under the ring system, the licensed manufacturer may apply to the sales tax office for approval to import or acquire from another licensed manufacturer raw material and components used in the manufacture of taxable goods free from sales tax.
The application for such approval must be made in the prescribed Form C.
The following particulars are included in the Form C. In addition, the licensed manufacturer is required to furnish the following document to the sales tax office:. Generally, the CJ5 is valid for a period of six months or a year.
The licensed manufacturer should take note of the following:. As such, a fresh approval is to be obtained upon the expiration of the existing approval or upon exhausting the quantity approved, whichever is the earlier. In the event that the approved quantity has been exceeded, the licensed manufacturer may submit a supplementary application for additional quantity equivalent to the quantity of raw material and component exceeded.
The licensed manufacturer should be reminded of their duty to maintain full and true records relating to the movement of raw material and components imported or purchased under the CJ5 facility.
Importation or acquisition of raw material and components are often transacted through agents appointed by the suppliers. In this connection, subsections 3 and 4 of section 9 were enacted to allow a vendor to import or acquire from another licensed manufacturer raw material and components free from sales tax for supply to a licensed manufacturer.
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The vendor is required to furnish an application in the prescribed Form C. To avoid such facility being abused, an authorization from the licensed manufacturer to whom the tax-free raw material and components to be delivered is necessary. The vendor is required to attach the following document when making application:. The vendor approved of the C.
The re-acquired goods is deemed as being manufactured by the first licensed manufacturer who is then required to levy and charge sales tax when such goods are sold or disposed of. The licensed manufacturer intending to use this facility is required to submit an application to the sales tax office using the prescribed form C.
The following documents are to be attached:. In addition, following documents related to the licensed manufacturer who receives goods for further process are to be furnished:. The refund system serves to supplement the usage of the C. In practice, not all the licensed manufacturers who have been approved the C.
It is not uncommon that such licensed manufacturers purchase raw material and components free from sales tax using the approved C. In this regard, the vendor is entitled to a refund of sales tax paid on such raw material and components.
Malaysia will reintroduce sales and services tax in September to replace GST: PM Mahathir
The application for refund must be made in the prescribed form JKED 2 and submitted to the sales tax office together with other relevant supporting documents within a year from the date of the transaction to which the claim relates.
The significance of this refund system has diminished with the introduction of the C.
Licensed manufacturers who purchase raw material and components from trading companies are not able to benefit from the facility of the ring system or refund system since sales tax has been imputed into the price of such raw material and components.
In this connection, section 31A of the Sales Tax Act was enacted to create the credit system to assist such licensed manufacturers and to uphold the single-stage tax concept.
A licensed manufacturer is required to apply to the sales tax office for approval to use the credit system facility.
He is required to furnish the following document in his application:.