Annie Thomas, Senior Assistant Director, Fraud Investigation Unit, RMCD provided guidance into the latest developments on GST Legislation and Guides at the recent MIA 2018 Budget Seminar.
By Majella Gomes
“The Budget is an expansionary budget. It is not about big spending but about encouraging innovation, technology, automation and bringing more women into the workforce,” explained Annie Thomas, Senior Assistant Director, Fraud Investigation Unit, Royal Malaysian Customs Department (RMCD), in a preamble to her detailed presentation on the latest amendments to the legislation underpinning GST guidelines and regulations. With GST providing about 18% of government revenue, this value-added tax is here to stay, she added, and traders were getting used to it.
Her GST updates covered the services by local authorities and the related amendments to the Act. Among the updates:
- The current zero rating of some printed reading materials will now be extended to cover all printed materials, effective from 1 January 2018.
- Cruise ship operators would be given relief from payment of GST for handling services, from 1 January 2018 to 31 December 2020. These services include port and harbour services, dock and berth, wharfage, conservancy, graving dock services, mooring, demurrage, security and fire services.
- Relief given for the supply of construction services to construct school buildings and houses of worship funded through public donations includes assembly halls and sports courts used directly for training and education.
- Oil & gas suppliers in Labuan, Langkawi and Tioman who lease oil and gas-related upstream equipment to customers in Malaysia outside these areas will be eligible for GST relief under Section 56(1), with effect from 1 January 2018. Big-ticket items like oil rigs and floating structures, aircraft and ships also qualify for relief. There have been no legislative amendments to facilitate these but requests can be made through applications to the RMCD.
- At present, where the developer manages and maintains services for stratified residential buildings, these services are standard-rated for GST. However, where these services are undertaken by a management company, they are exempted from GST. With effect from 1 January 2018, developers who manage the services and management companies doing the same, will be subject to GST.
She also explained the amalgamation of the Customs Appeal Tribunal and the GST Appeal Tribunal into a single entity known as the Customs Appeal Tribunal. This was to optimise the functionality of the bodies, improve appeal management and better manage resources. “DG’s decisions will now be reviewed in just one tribunal.”
Thomas’s presentation also covered the changes to Finance (No 2) Bill 2017 D.R. 40/2017, Sections 22 (3) and 43 (1A); Public Rulings PR 1/2017, PR 2/2017 and PR 3/2017. Section 22 (3) deals with the cessation of registration of a taxable person while Section 43 (1A) is a new insertion that allows the Director General (DG) to assess tax and late payment penalty due, of any person who is not GST-registered.
Lately, several challenges have arisen, she said. Foremost has been the challenge posed by online market places like Amazon, Lazada, eBay and other such platforms. “Online market places like these are actually foreign businesses,” she pointed out. “They are doing business in Malaysia but are not being taxed. This is not fair to local businesses.”
Compliance Through Education
Because of the dynamism of doing business today, the authorities have had to ramp up policing but she said that compliance through education – the “soft” approach – was preferable to a punitive approach. Taxpayers were constantly being exhorted to practise comprehensive documentation, for instance, and the RMCD was always ready to help businesses out if approached, through its Assisted Compliance Assurance Programme and Voluntary Disclosure, encouraging businesses to come forward if they had difficulties concerning improper or incorrect returns that required amendment, or to negotiate for the possible remission of penalties. In addition, the RMCD also offers online assistance and tutorials.
While many taxpayers did make efforts to file returns, there were still cases where mistakes were made or returns were incorrectly filed. The main gripe of taxpayers appears to be the long hours taken to prepare returns, and the costs associated with this. From the RMCD’s standpoint, GST challenges were primarily administrative, such as non-filing of returns, incorrect filing and non-payment; incorrect details on returns filed, late registration or deregistration; and the timely issuance of refunds. Public rulings and Input Tax Claims for businesses with long gestation periods and no taxable supplies (eg: planting of trees for timber), could also be complicated.
Urging businesses to practise voluntary disclosure, she said that if they were aware of having made mistakes, they should inform the RMCD. Proper disclosure could enable the RMCD to consider the penalties concerned, and if these should be paid in full or if they could be lessened.