Increased Service Tax rate for services 6% 8% CURRENT PROPOSED Effective: 01.03.2024 生效期 ：2024年3月1日
Increased Service Tax rate for services Effective: 01.03.2024 生效期 ：2024年3月1日 Group Service tax Current Proposed Group A - Accomodation 6% 8% Group B - Food and beverages 6% Group C - Night clubs, Dance Halls, Health Centres, Massage Parlours, Public House and Beer House 8% Group D- Private Clubs 8% Group E - Golf Club and Golf Driving Range 8% Group F - Betting and Gaming 8% Group G – Professionals 8% Group H - Credit Card and Charge Card RM 25 per annum RM 25 per annum Group I - Others 6% 8% Telecommunication services Vehicle parking space services Logistic services 6%
Increased Service Tax rate – Transitional period Shipping Sdn. Bhd (Dec YE), a logistic company entered into an agreement on 01.07.2022 with ABC Sdn. Bhd., a trading company for transportation and logistics services. The agreed contract was RM3,000/ month for 3 years. Service provided period Total value of service Subject to Service Tax? 01.07.2022 – 31.12.2022 RM3,000 x 6 = RM18,000 NO (not taxable service) 01.01.2023 – 31.12.2023 RM3,000 x 12 = RM36,000 NO (not taxable service) 01.01.2024 – 29.02.2024 RM3,000 x 2 = RM6,000 NO (not taxable service) 01.03.2024 – 31.12.2023 RM3,000 x 10 = RM30,000 ??? 01.01.2025 – 30.06.2025 RM3,000 x 6 = RM18,000 ???
Import Duty & Sales Tax Exemption on Manufacturing Aids Effective: 01 January 2024 生效期 ： 2024 年 1 月 1 日 CURRENT PROPOSED NO import duty and sales tax exemption on importation and locally purchased of manufacturing aids Import duty and sales tax exemptions will be given to eligible manufacturers on the importation and locally purchase of manufacturing aids subject to types of industry and category of goods Manufacturing Aids - any goods used in the manufacturing process to accelerate/improve/complete the manufacturing process of the finished goods (not part of finished goods)
E-invoicing
E-Invoicing A digital representation of a transaction between a supplier and a buyer Replaces paper or electronic documents such as invoices, credit notes, and debit notes. Contains the same essential information as traditional documents, such as seller/buyer details, item description, quantity, price, total amount
E-Invoicing Benefits To Taxpayers BENEFITS Reduction in manual efforts and human errors Facilitated tax return filing for efficient and accurate tax reporting Enhanced efficiency and significant time and cost savings Digitalized financial reporting to align with industry standards
Current timeline (indicated by IRB earlier) 1 June 2024 1 January 2025 1 January 2026 1 January 2027 Mandatory implementation for taxpayers with an annual turnover or revenue > RM100 million Mandatory implementation for taxpayers with an annual turnover or revenue > RM50 million and up to RM100 million Mandatory implementation for taxpayers with an annual turnover or revenue of > RM25 million and up to RM50 million Mandatory for all taxpayers and certain non- business transactions Taxpayers can opt to voluntarily participate in the implementation at an earlier date, regardless of their annual turnover or revenue Implementation timeline (as proposed in Budget 2024) 1 August 2024 1 January 2025 1 July 2025 Mandatory implementation for taxpayers with an annual turnover or revenue > RM100 million Mandatory implementation for taxpayers with an annual turnover or revenue between RM25 mil to RM100 mil Mandatory implementation for ALL other taxpayers
Countries that has implemented e-invoicing Argentina Chile Colombia Italy India Singapore B2G: Mandatory B2B: Not mandatory China Shanghai & Guangdong implemented invoicing system pilot for selected taxpayers Aiming for countrywide e-invoicing by 2025
Category of taxpayer Basis Taxpayer with audited financial statements (AFS) Annual turnover stated AFS for FY 2022 Taxpayer without audited financial statements Annual turnover stated in tax return for YA 2022 When there is change of accounting year end for year 2022 Pro-rated to 12-month period How to determine? E -Invoicing
How to implement? 1 Issuance of e-invoice 2 Validation of e-invoice 4 Sharing of e-invoice 6 MyInvois Portal Rejection or cancellation of e-invoice 5 Notification of validated e-invoice 3
Offences For Failure To Issue Electronic Invoices Failure to enter and submit invoices Failure of the supply recipient in the case of a self-billed invoice to enter the self-billed invoice Failure of the supplier to submit a consolidated transaction invoice !! FINE !! Minimum RM200 and not more than RM20,000 or imprisonment not exceeding 6 months or both
Others
Special Voluntary Disclosure Programme 2.0 (SVDP 2.0) Income Tax Sales and Service Tax (SST) Individual tax, Corporate tax, Transfer Pricing (TP) and Real Property Gain Tax (RPGT). Sales tax, Service Tax, Goods and Services Tax. Sales and Service Tax (SST)
SVDP 1.0 vs SVDP 2.0 SVDP 1.0 SVDP 2.0 Period Phase 1 – 3 Nov 2018 to 30 June 2019 (8 months) Phase 2 – 1 July 2019 to 30 Sept 2019 (3 months) 6 June 2023 to 31 May 2024 (Approx to 12 months) Penalty Phase 1 – 10% Phase 2 – 15% 0% Contributors 286,482 13,109 * (Target 50,000; 26%) Amount collected RM 7.88 billion RM 94.47 million * (Target RM 1 billion; 9.45%) Source : freemalaysiatoday * As at 31.07.2023, 2 months after commencement of SVDP 2.0
Benefits of SVDP 2.0 Provision under legislation Penalty Section 112(3) – Failure to submit tax return Up to 300% of tax payable Section 113(2) – Understate income Up to 100% of tax undercharged Section 140A(3C) – Transfer Pricing Adjustment 5% Section 29(3) RPGT Act – Failure to submit RPGT Return Up to 300% of tax payable Penalty 100% waived The following penalties as a result of non-compliance in prior years will be 100% waived:-
Benefits of SVDP 2.0 No further audit in the future • IRB will accept the voluntary disclosure under SVDP in good faith • No audit will be performed by IRB in the future for the same year of assessment where the voluntary disclosure has been made • Only a review of the calculation will be performed to ensure there is no mathematical calculation error/ mistake • Audit maybe performed if taxpayer failed to make payment on time
Who should participate? 1 New taxpayer 2 Existing taxpayer Taxpayer who has disposed asset 3 4 Duty payer Person who are reporting income for the first time (regardless of whether the person has income tax number) and applicable to non-resident Person who have reported their income but have undeclared or under-declared their income Person who have unreported disposal of chargeable asset. (Sell land, property or share in real property company) Person who have executed instruments which are not duly stamped after the time for stamping. (e.g. Tenancy agreement)
Who are not eligible? X “Noticed” taxpayer X Employer Person who are undergoing audit/ investigation action by IRB (commenced/ in the process) are not eligible for any year of assessment In respect of their employer obligation matters (e.g. Form E, PCB)
Which Year of Assessment involved? Type of tax Period Income tax New taxpayer : YA2022 and before Existing taxpayer : YA2021 and before Real property gain tax (RPGT) Disposed assets in Year 2022 and before Stamp duty Instrument executed on or before 1 May 2023 Transfer pricing Subject to the criteria and procedure outlined in the prevailing Tax Audit Framework for Transfer Pricing
Procedure & Methods • IRB will process the application within 14 working days from the date of receipt of duly completed applications. 3. Approval from IRB • Tax computation • Income tax return form (Form C/ B/ BE) • SVDP 2.0 Additional Income Reporting Form 1. Check TIN 2. Submit documents • Full payment OR • Apply for instalment (until 31 May 2024) 4. Make payment • Register via e-daftar
SVDP 2.0 Additional Income Reporting Form
Approval letter from IRB
Instalment approval letter from IRB
Application period From 6 June 2023 to 31 May 2024 Covered period Up to 28 February 2023 Type of taxes covered Sales Tax Act 1972 Service Tax Act 1975 Goods and Service Tax Act 2014 Tourism Tax Act 2017 Sales Tax Act 2018 Service Tax Act 2018 Payment of tax Lump sum payment (one-off); ORInstalment payment (by application) and based on the prescribed instalment schedule VDP 2.0 for Indirect Tax
Benefits of VDP 2.0 NO compound 0% penalty NO audit in the future
1) Any person who have registered 2) Any person who is liable to be registered but have not registered 3) Any person who acquire imported taxable service under GST or SST but failed to account for tax payable to RMCD. 4) Any person who is registered under Sales Tax Act 1972 or Sales Tax Act 2018 but has not declared accordingly Who are eligible to participate?
Process Flow for application and registration http://myvdp.customs.gov.my 1. Online register a User ID via MyVDP system 2. Submit application by filing in the information required in Form VDP-01 3. Upon approval by RMCD, a letter of eligibility to participate (Letter VDP-02) including payment details will be issued 4. Settle tax payment in full within the prescribed timeline 5. Upload the proof of payment in system MyVDP 6. Issuance of certificate by RMCD after full payment (VDP-03) in MyVDP within 14 working days
Sample of VDP-01 Form
• High-value Goods Tax on luxury watches, fashions goods, etc. To bridge the income gap between the T20 and M40 High-Value Goods Tax (fka Luxury Goods Tax) Luxury Goods = Goods & Services are not essential and consumed by only a niche.
Countries that administered luxury tax:- High -Value Goods Tax Thailand 30% South Korea 10% - 20% United States 0 -10% Malaysia Proposed to be implemented in Year 2023, now schedule to implement in Year 2024 5 – 10%
For further discussion on any advisory service, please call our directors / managers for appointment: • Annie : 017-619 2300 • Janet : 017-689 8300 • Jing Yee: 017-208 2345 • Cindy : 017-665 3500 • Theresa: 012-367 0202 • Office : 03 – 7802 3333 [email protected] www.adrianyeo.com No. 63A, Jalan SS25/2, Taman Bukit Emas, 47301 Petaling Jaya, Selangor AdrianYeo PLT 84