Criteria for GST Registration for Business

Under Goods & Services Tax (GST) system in Malaysia, businesses with annual sales of RM500,000 or more, oblige to be registered under the GST. If your business annual sales do not exceed this amount, you are not required to register for GST.

Such businesses can apply for voluntary registration. However, once registered, the businesses must remain in the system, for at least 2 years. On top of that, the business required to charge and collect GST on the taxable supplies and entitled to claim input tax credit.

To determine whether your business obliges to register for GST, a calculation is made base on previous 12 months and forecast next 12-month sales. The annual sales of RM500,000 threshold deem reach when the sales records for the past 12 months and estimated sales for the next 12 months reach this figure.

The annual threshold of is fixed at RM500,000 to ensure that the small businesses are GST-free and are not required to bear the costs of registration (start-up cost up cost and compliance cost) under the GST.

Based on studies, it is estimated that about 78% of the total business establishments will not fall within the GST system. As such the consumers have the choice of making their purchases of basic needs from the businesses which do not charge the GST.

With this in mind, the consumers in the rural areas will not be burdened by the GST.