UPDATE: GST has been set at zero from 1 June 2018, to be replaced by a Sales Tax in the autumn of 2018.
On 1 April 2015, Malaysia implemented a full Goods and Services Tax (GST) regime to replace its existing Sales and Services Taxes.
GST is based upon widely accepted OECD standards, which includes full liability across the whole production chain with the right to deduct, and on imports. This is fundamental change from the existing consumption taxes which are only charged once, which have no ability to deduct.
GST is administered by the Royal Malaysian Customs Authority. Malaysian GST registration is required of all businesses, resident and non-resident, making taxable supplies above the annual tax threshold.
The Malaysian GST rates are as follows:
- Standard GST rate: 0% most goods and services
- Zero rate: Public electricity and water supplies, basic foodstuffs and certain agricultural supplies
- Exempt: Exports, financial services, residential real estate, public transport and education, public transport, health and agricultural land
The GST regime brings a much wider range of services into the indirect tax regime, and will therefore broaden the tax base. This is viewed as important to stabilize Malaysia’s future government revenues.
Malaysian GST rates
|Rate||Type||Which goods or services|
|0%||Standard||GST was suspended 1 June 2018. It will be replaced with SST.|
Time of supply
Malaysian GST sets the time of supply, the date at which the tax becomes applicable as the earlier of the following three points:
- When an invoice is issued to the customer
- When a cash payment is made by the customer
- The time when the supply is made
Reporting is on an accruals bases, which includes the right to deduct any input GST suffered.