Special Registration Cases For GST Malaysia
It is without doubt that there are many instances that could take place when one is in business. The amount of factor involved would be tremendous and now with GST takes place, it becomes hard. The below would be the common issues that we at GST@Work would be able to highlight as of now.
Transfer of Business As a Going Concern
This is a facility to assist business in the transfer of business assets from the seller to the buyer without having to account for GST to alleviate cash flow problem. This is of use especially if the seller has a lot of assets in the business. Charging the business buyers GST wouldn’t be an issue but the amount of effort to reclaim those input tax charge in those assets can be seen as redundant as more work is done but no results.
As usual there are rules and condition in order to apply such registration. The transfer can be considered as TOGC:
- The transferor is a taxable person.
- The transferee is a taxable person or will be a taxable immediately after the transfer.
- The transfer must include the transfer of business assets and to be used in carrying on the same kind of business, and
- If only part of the business is transfer, then that part of business must be capable of separate operation.
There is a time frame you must comply in order to get the transfer to be considered as TOGC. The transferee must apply for registration within 28 days from the date of transfer. Effective date of registration is the date of transfer of the TOGC.
Zero Rated Supplies
Zero rated supplies are in fact considered as taxable supply and as such a taxable person is required to be registered if the value of annual taxable turnover exceeds RM 500,000. Those items belong in this group would be for an example; live stocks, flour, rice which includes brown rice and more. However, if the taxable person is making wholly zero rated supplies may apply for exemption from registration. This is subject to the DG approval.
The rationale for this could be the taxable person felt that the cost of compliance could be higher than the benefits of claiming the input tax credits on any input tax incurred in the course or furtherance of his business.
and there is this category of registration….
This facility is available to those who are not required to be registered. It could be those small businesses making taxable supply in which the turnover is around 400k to 450k. Such persons may apply if he makes taxable supplies and he is committed to doing business by submitting a set of documents to the Customs.
The documents are:
- Details of business arrangement
- Contract for the establishment of premises
- Details of any patents
- Details of business purchases
- Other documentary evidence
Since the business owner has decided to volunteer register himself for GST, there are rules to comply. Voluntary registered business needs to be remain registered for a period of 2 years. Those making wholly exempt supplies are not allowed to be registered and lastly prospective registrants are advised to consider the cost and benefits of such registration.
Group Registration is a facility that allows inter-company charges on supply between members of a group to be disregarded. There are companies are inter connected within one another that trades among themselves. The presence of GST can make it troublesome as there would be more work especially in accounting for the tax incurred.
A group can be formed between two or more related companies subject to fulfilling the following conditions :-
- Each company must be making wholly taxable supplies.
- Members of the group must be individually registered before making group application.
- An individual, partnership or company (including foreign companies) holding more than 50% of the issued share capital is considered as having control over the other companies, and
- All members of the group are jointly and severally responsible for the payment of tax.
Below would be an example of a group registration situation:
Control over the other companies can be directly or indirectly by holding more than 50% of the issued share capital. Group registration is allowed regardless of the type of taxable supplies made by the members as long as they are making wholly taxable supplies. Below would be an example of such cases:
Individual or partnership is not elligible to be a member of a group. However, companies controlled by the individual can register as a group. Below would be an example of such cases: