Malaysia GST – Types of Supply


Under the scope of Goods and Services Tax (GST) in Malaysia, supplies fall into 4 categories. They are, standard rated supplies, zero rated supplies, exempt supplies and supplies not within the scope of GST. Goods and Services that fall under each category predetermined by the Royal Custom Department of Malaysia.

Below is the explanation of each category.

1. Standard Rated Supplies

Standard rated supplies are referring to taxable goods and services, which are subject to a standard rate of 6%.

Any taxable person or company who is registered under GST requires to collect GST on behalf of the government on their sales of the supplies.  The person or company is eligible to claim input GST credit on the business inputs in making the said supplies.

For the consumers, they can identify the standard rated supplies by looking at the receipt when making the purchase. Normally, standard rated supplies GST labelled with an “S”.

The examples of standard rated supplies are local supply of goods or services, supply of land and building for commercial and construction of all types of building.

2. Zero Rated Supplies

Zero rated supplies are referring to taxable goods and services, which are subject to a tax rate of 0%.

Within this category, taxable person or company who is registered under GST does not require to collect any GST on their sales.  However, the said person or company is eligible to claim input GST credit on the business inputs in making the said supplies.

For the consumers, they can identify the zero rated supplies by looking at the receipt when making the purchase. Normally, zero rated supplies GST labelled with a “Z”.

The examples of zero rated supplies are goods such as basic food and utilities such as beef, rice, sugar, water for domestic use and first 200 units of electricity per months for domestic use.

3. Exempt Supplies

Exempt supplies are referring to goods and services, which are not subject to GST.

Within this category, taxable person or company who is registered under GST does not required to collect any GST on their sales nor eligible to claim input GST credit on the business inputs in making the said supplies.

For the consumers, they can identify the zero rated supplies by looking at the receipt when making the purchase. Normally, exempt rated supplies GST labelled with a “Z”.

The examples of exempt supplies are transport services, toll or highway and certain financial services.

4. Supplies not within the scope of GST

This category refers to supplies, which do not fall within the charging provision of the GST Act.

The example include non-business transactions, sale of goods from a place outside Malaysia to another place outside Malaysia as well as services provided by the Government sector.

Summary

Type of Supplies GST Rate Input GST
Standard Rated 6% Claimable
Zero Rated 0% Claimable
Exempt Not Charged Not Claimable

Taxation in Malaysia for Non-Resident Individual


Under Malaysian Tax Law, both Residents and Non-Resident are subject to Income Tax on Malaysian source income.

Residents and Non-Resident status will give a different tax regime on income earned/received from Malaysia. So it is very important to identify whether you are Residents or Non-Resident in regard to Malaysia Tax Law.

An Individual will be considered Non-Resident for Income Tax purpose if the individual is physically present in Malaysia for less than 182 days during the calendar year regardless of the citizenship or nationality. The 182 days period can be consucative period or not.

If the individual is Resident in regard to Malaysian Tax Law, the individual is subjected to normal income tax.

However, if the individual is Non-Resident in regard to Malaysian Tax Law, the income tax rate is higher when compare to Resident.

Non-resident Tax rate is tabulated in the table below,

Types Of Income Rate (%)
Business, trade or profession 25 (With Effect From Year Assessment 2015)

26 (Year Assessment 2010 – 2014)

Employment
Dividends
Rents
Public Entertainer 15
Interest
Royalty 10
Payments for services in connection with the use of property or installation, operation of any plant or machinery purchased from a non-resident
Payments for technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme
Rent or other payments for the use of any movable property

However, Non-Resident Individual will not be taxable if

  1. Employed in Malaysia for less than 60 days
  2. Employed on board a Malaysian ship
  3. Age 55 years old and receiving pension from Malaysian employment
  4. Receiving interest from banks
  5. Receiving tax exempt dividends

If taxable, you are required to fill in M Form .


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