Persons having businesses with annual sales turnover exceeding RM500,000 are liable to be registered under GST. Persons include an individual, sole proprietor, partnership, company, trust, estate, society, union, club, association or any other organization including a government department or a local authority which is involved in the business of making taxable supplies in Malaysia.
The annual sales turnover can be determined based on either:
- The total value of taxable supplies of the current month and the previous 11 months, or
- The total value of taxable supplies of the current month and the next 11 months.
What if your annual sales turnover is less than RM500,000?
If your annual sales turnover is less than RM500,000, you can apply to register voluntarily but subject to approval by RMCD.
What are the advantages if I choose to register voluntarily?
As you will need to comply with the GST Act 2014, you are entitled to claim back any GST that you have paid for your business. You will also need to charge your customers GST for any supply of goods and services which are not exempted or zero-rated.
What about the disadvantages?
Well, you are required to comply with the GST Act 2014 for a minimum of two (2) years before you can deregister from GST. Hence, you need to be prepared to ensure full compliance with the GST Act 2014 before registration as you are not allowed to deregister immediately.
There are TWO more types of Registration that may be relevant to your business, Group Registration or Divisional/Branch Registration.
Group Registration
- Companies are eligible for group registration if one company controls another company. One company is taken to control another company if the first mentioned company holds directly, indirectly through subsidiaries or together directly or indirectly through subsidiaries more than 50% of the issued share capital of the second mentioned company.
- Each company must be registered individually before they can be grouped as a single registered person and each company must be making wholly taxable supply.
- One of the members has to be nominated by the group as the representative member of the group.
Advantages?
- Any taxable supply made by or to a member of the group shall be treated as a supply by or to the representative member.
- Supplies between group members would be disregarded as a supply.
Disadvantages?
- Each member of the group is required to keep proper records as they are jointly and severally liable.
- The members of the group have to ensure that they have a centralized system to collect and collate the necessary information for submission of GST-03 returns.
Divisional/Branch Registration
If a taxable person who is carrying on its business has several divisions or branches (subject to stipulated terms and conditions), the taxable person can be registered in the names of those divisions/branches. This is a facility for any taxable person with a number of self accounting units to register each unit separately for GST.
Each division/branch will be given a separate GST identification number and make its own returns. However, the taxable person remains accountable for all GST liability of all divisions/branches.
Conclusion
As such, the GST taxable person has to carefully assess their Company business nature so as to elect the most suitable registration mode for their Company which could ultimately ease the cost of compliance and complexity during the GST-03 returns submission and the GST charging to their customers or related parties.
Article is written by Ng Choon Jin, CA(M), FCCA, ACTIM, Executive Director of S.L. NG Tax Services Sdn Bhd. Log on to www.slng2u.com for more information. The article represents his personal views.
