Documents for GST in Malaysia
What are the documents & records to account for GST? It has been a month plus that GST have begun in Malaysia and let’s have a look at how registered entity accounts for GST through the documents they issued. The most important document is the tax invoice. A registered person making taxable supplies is required to issue a tax invoice.
What about the tax invoice? Why is it considered important?
The supplier will be able to determine the time of supply on which GST is to be accounted and also to determine the supplies to be included in a particular taxable period.
Purchaser (also a registered person)
The purchaser can determine when he may claim the input tax credit on the tax invoice and also be able to support his claim for input tax credit on standard supplies.
* Tax invoice may not be required to be issued by a registered person for:
- A zero rate supply
- A supply without considered on which tax is charged (deemed supply)
Details of a full tax invoice:
A full tax invoice shall contain the following information :-
- The word ‘tax invoice’ in a prominent place;
- The tax invoice serial number;
- The date of issuance of the tax invoice;
- The name, address & identification number of the supplier;
- The name and address of the person to whom the goods or services are supplied;
- A description sufficient to identify the goods or services supplied;
- For each description, distinguish the type of supply for zero rate, standard rate & exempt, the quantity of the goods or the extent of the services supplied and the amount payable, excluding tax;
- Any discount offered;
- The total amount payable excluding tax, the rate of tax and the total tax chargeable to be shown separately;
- The total amount payable inclusive of the total tax chargeable; and
- Any amount referred to in sub paragraph 9 & 10 expressed in a foreign currency shall also be expressed in Ringgit.
* Throughout going through multiple tax invoices issued to us on a daily basis, it is crucial to identify some of these details as any error due to lack of details will and shall prevent the company from claiming the tax. Hence, whatever you might claim through the company will be less and I believe it you can be claiming a lot less than what you think you’re supposed to get.
The image below will show an example of a full tax invoice:
Simplified Tax Invoice
Sometimes the problem issuing a full tax invoice is that, GST is targeted to the consumers and hence such information required along the supply chain may or will be redundant to the consumers. Therefore, the Customs have decided that issuing simplified tax invoice would help this situation especially businesses with huge volume and transactions are in cash.
* Do take note that despite the invoice being “simplified”, you can still claim the tax on it. Bare in mind, you can still claim what you purchase, it is only the 6% which is the issue I believe.
Common details ommited are:
- Name & address of the recipient
- Price and tax for each item to be shown seperately
Input Tax Claim*
A simplified tax invoice without the name and address of the recipient can only claim up to a maximum of Rm 30 in input tax.
* A tax invoice can come in all sorts of name. It can also be a receipt. As it contains the particulars required for a full tax invoice or simplified tax invoice approved by DG.
Tax Invoice in Foreign Currency
If invoice is in foreign currency, the following items must be converted in RM –
- Total amount payable exclusive of GST
- Total GST chargeable
- Total amount payable inclusive of GST
For currency conversion, the following exchange rates applicable to the time of supply is acceptable by RMCD
- Use of daily exchange rates for local transactions (buying, selling or average of the two) of any commercial banks in the country.
- Exchange rates published by RMCD for importation.
Below would be an example for this case:
It is clear that there are major changes in the how businesses operate at this point. One of them would be a computer system in order to generate the tax invoice. Reasons would be the accounting system is linked with the GST. Therefore, it becomes a need. There shouldn’t be any handwritten tax invoice as one could tell, tracking would be an issue and also what is being supplied can be or will be an issue. It is indeed troublesome, but it is mandatory.