Sales tax is charged and levied on imported and locally manufactured goods either at the time of importation or at the time the goods are sold or otherwise disposed of by the registered manufacturer.
In implementing the requirements of sales tax legislation for the purpose of registration, two key factors needs to be addressed, first in determining that the manufacturing activities fulfilled the definition of manufacture by this Act and that The Sales Value of Taxable goods (SVTG) manufactured exceeds the prescribed limit.
Manufacture is defined under Section 3 of the Sales Tax Act 2018 as:
(i) In relation to goods other than petroleum, the conversion by manual or mechanical means of organic or inorganic materials into a new product by changing the size, shape, composition, nature or quality of such materials and includes the assembly of parts into a piece of machinery or other products, but does not include the installation of machinery or equipment for the purpose of construction; and
(ii) In relation to petroleum, manufacture means any process of separation, purification, refining, conversion and blending.
Taxable goods means goods manufactured in Malaysia or imported into Malaysia which is not exempted from sales tax. Only registered manufacturers shall impose sales tax on manufactured taxable goods.
Sales tax is ad valorem tax and the applicable rate is 5% and 10% based on the type of taxable item. Specific tax rates are set for petroleum products.
Sales Tax Registration
Any person who manufactures taxable goods and the sales value of such taxable goods for a period of 12 months and exceeds the threshold of RM500,000 is liable to be registered.
Any manufacturer is liable to be registered when:
(i) The sales value of taxable goods manufactured exceeds RM500,000 within 12 months;
(ii) Wage value for work performed on taxable goods by subcontract manufacturer exceeds RM500,000 within 12 months.
However, a manufacturer with a sales value of taxable goods of RM500,000 and below may apply for voluntary registration subject to approval by the Director General of Customs (DG).
In determining the liability of a manufacturer to register, the sales value of taxable goods for a period of 12 months is calculated using any one of the two methods as follows:
(i) Historical Method - Total sales value of taxable goods in any month and the 11 months immediately preceding that month
• 1- 30 September 2018 – Period to apply for registration.
• 1 October 2018 - Effective date of registration and to start charging sales tax
(ii) Future Method - total sales value of taxable goods in any current month and expected sales value of 11 months immediately succeeding that month
• 1 November 2018 - 31 July 2019 – Estimated sales value of taxable goods is RM420,000.
• 1-30 November 2018 – Liable to be registered for sales tax
• 1 December 2018 – Effective date of registration and to start charging sales tax
Registration Effective Date
The manufacturer is required to apply for registration no later than the last day of the following month after being liable to be registered. The effective date of the registration shall be on the first day of the following month after the month in which application for registration was made.
• 30 November 2018 - Last date to apply for registration
• 1 December 2018 - Effective date of registration
Registration Procedure
Application for sales tax registration shall be made electronically in MySST portal at www.mysst.customs.gov.my.
Registration kiosks are provided at the SST Division in all RMCD offices throughout Malaysia
Once registration has been approved, an approval letter will be generated by the system, stating the sales tax registration number, the effective date of registration and other relevant details with appendix of registered person’s list of responsibilities. This approval letter will be sent to the email address registered by applicants.
Transition Period
Automatic and Non- Automatic Registration
During the transition of the tax system, manufacturers which have been identified by Malaysia Standard Industrial Classification (MSIC) and exceeds registered the threshold under the GST 2014, will be automatically registered by the Director General of Customs (DG).
Automatically registered manufacturers may check their Sales Tax registration status through the MySST system.
Manufacturers of taxable goods which are not registered automatically is required to apply for registration before the effective date of Sales Tax Act 2018.
Automatic registration is done from August 2018 to 31 August 2018 and will be effective on 1 September 2018. For registrants not receiving emails or not automatically registered should apply for new registration electronically through the MySST Portal.
Scenario No.1:
Company Ali is a GST registrant. The company has been automatically registered under Sales Tax 2018 on 8 August 2018 and received an email as a registered person. The effective date of registration is on 1 September 2018. Company Ali does not need to apply for a new registration.
Scenario No.2:
Company Eng is a GST registrant, but does not receive the emailed registration letter although the company is liable to register under Sales Tax 2018 for exceeding the threshold. On August 15, 2018, the company applied for registration under Sales Tax 2018 and the effective date of registration is on 1 September 2018. Registration is mandatory registration.
Scenario No.3:
Muthu Company is not registered under GST and does not receive the emailed registration letter. Company sales value has not reached the threshold value. Muthu Company is not liable to be registered but has applied for registration on 24 August 2018. Muthu Company will be registered and the effective date of registration is on 1 September 2018. Registration is a voluntary registration.
Scenario No.4:
Zamri Company is not registered under GST and does not receive the emailed registration letter although the company is liable to register under Sales Tax 2018. The sales value of the company has reached its threshold value in June 2018. The Zamri Company need to apply for a new registration. On 28 August 2018, Zamri Company has applied for registration and the effective date of registration is on 1 September 2018. Registration is mandatory registration.
Scenario No.5:
Rokiah Company is a GST registrant but is not automatically registered under Sales Tax 2018. The company's sales value has exceed the threshold and the company is liable to register under Sales Tax 2018. On 11 September 2018, Rokiah Company has applied for registration. The registration date is on 1 October 2018. Registration is mandatory registration.
Scenario No.6:
Tan Company is not registered under GST but the company is liable to register under Sales Tax 2018. Tan Company need to apply for a new registration. On 20 September 2018, Tan Company applied for registration. The effective date of registration is on 1 October 2018. Registration is mandatory registration.
New Registration
Under the Sales Tax Act 2018, any eligible manufacturer who are liable to be registered are required to apply for registration not later than the last day of the following month in which he is liable to be registered.
GST registrant whose exceeds RM500,000 of total annual sales of taxable goods are liable to be registered in August 2018. They should apply to register in August 2018 or not later than 30 September 2018 and will given the effective date on 1 September 2018 or 1 October 2018 for those applying in September 2018.
The effective date of Sales Tax registration is the first day of the month following the month application was made.
Liable manufacturer must register all his manufacturing premis address(s) and can only perform his manufacturing activity at the premise(s) registered with RMCD.
Voluntary Registration
Any manufacturer or subcontract manufacturer of taxable goods with a total sales value of RM500,000 and below is allowed to register under voluntary registration.
Any class of person who is exempted from registration under Schedule B of the Sales Tax (Exemption from Registration) Order 2018 are also allowed to register under voluntary registration.
Any manufacturer who manufactures non taxable goods is not allowed to register under voluntary registration.
Exemption from Registration
Three categories of manufacturers who are exempted from registration under this Act:
(i) Manufacturers who manufacture taxable goods or sub-contractor doing subcontract work of taxable goods but does not exceed sales value of taxable goods of RM500,000.
(ii) Manufacturers of goods that are not subject to sales tax under Sales Tax (Good Exempted from Sales Tax) Order 2018.
(iii) Manufacturers whose manufacturing operations is any one of those specified in Schedule B, Sales Tax (Exemption from registration) Order 2018.
Example: Manufacture of jewellery and goldsmiths wares; the installation of air conditioners in motor vehicles and ready mixed concrete manufacture.
Notification of the Changes on Particulars of Registered Manufacturer
Any amendments to the registered particulars below is to be informed in writing to the JKDM Controlling Station.
(i) Change in the name of the business;
(ii) Change in the address of any place of business;
(iii) Change of members in the partnership;
(iv) Change in the status of the business;
(v) Change or addition in the manufactured goods;
(vi) Opening of any new place of business or closing of any place of business
Registered manufacturer who ceased to manufacture taxable goods or ceased to be eligible to register must inform RMCD in writing of the occurence within 30 days of the date of cessation.
Responsibilities of the Registered Manufacturer
Responsibilities of the registered manufacturer includes:
(i) Charge sales tax on sale of taxable goods;
(ii) Issue sales invoices in the national language or English;
(iii) Submit SST-02 returns and payment;
(iv) Keep adequate records for a period of seven (7) years from the latest date to which the records relates.
Deregistration
A registered manufacturer may apply to cancel his registration if he is no longer liable to register.
Registration of any manufacturer may be cancelled by the DG if it is found that the person concerned is not liable or not eligible to register.
Registered manufacturer may apply to be deregistered under the following circumstances when he:
(i) Ceases to manufacture taxable goods;
(ii) Total sales value for the period of the next twelve months do not exceed the threshold for the purpose of registration.
A registered manufacturer is required to notify RMCD within 30 days from the date of occurrence if he ceases business or ceases manufacturing taxable goods.
A registered manufacturer who has notified RMCD of his requirement to deregister is still responsible as a registered manufacturer to impose sales tax and submit sales return until the date the cancellation of sales tax registration is approved.
Registered Manufacturer Put Under Liquidators and Receivers
Liquidator to a winding up registered manufacturer need to:
(i) Give notice to the DG within 14 days in writing after the winding up resolution
(ii) Set aside any sales tax payable by the manufacturer to the RCMD
(iii) Pay RCMD the amount set in (ii)
Receivers to the property of a registred manufacturer shall:
(i) Give notice to the DG within 14 days in writing of his appointment as receivership
(ii) Set aside sufficient amount of any sales tax payable to RMCD by the manufacturer before disposing of any of its asset
(iii) Pay RCMD the amount set in b) after disposing of the asset
Frequently Ask Questions (FAQs)
Q : Are Special Areas such as LMW and FZ are not required to register for SST?
A : Yes
Q : Is the sales tax license still being issued and should be displayed on the business premises?
A : Sales tax license will not be issued under SST 2018. Only registration numbers are used as registered manufacturer's identity under the SST.
Q : Can a company apply for a sales tax registration by branch?
A : No.
Q : My company has 2 registration numbers in GST (IPC & LMW). Is the company still subject to 2 registration under SST?
A : Only 1 registration is required.
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Edited by: 浪子
Bibliography
Royal Malaysian Customs Department. (2018). Guide On Registration. Retrieved from
https://mysst.customs.gov.my/assets/document/1.%20Guide_Registration%20Sales%20Tax_25082018.pdf
SST - Guide On Registration
Reviewed by 浪子
on
September 09, 2018
Rating:
Reviewed by 浪子
on
September 09, 2018
Rating:
