BUDGET 2016 PROPOSALS – GST

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a)     ZERO RATING OF NEW ITEMS

Additional food items proposed to be zero rated under GST:

    • Organic, soy bean based milk for infants of 0-36 months
    • Chickpeas, green and white bean, pigeon peas
    • Lotus root, water chestnut
    • Mustard seeds
    • Sugar to include jaggery powder
    • Mee kolok (dry)

 4,415 new brands of products to be added to the existing list of zero rated medicines as below:

    • 4,320 brands of controlled drugs under Poison Groups A, B, C and D under the Poisons Act 1952
    • 92 brands of over the counter medicines
    • 3 brands of medical devices

 The proposal is effective 1 January 2016.

 b)    EXEMPTION FOR SUPPLY OF DOMESTIC AIR TRAVEL

Domestic air travel within and between Sabah, Sarawak, and Labuan by economy class passengers under Rural Air Services to be exempt from GST.

 The proposal is effective 1 January 2016.

 c)     REBATE OF GST ON PREPAID CARDS

Mobile phone users of prepaid telecommunication services or prepaid cards will receive rebates equivalent to amount of GST paid by way of direct credit to their prepaid accounts.

 The proposal is effective 1 January 2016 – 31 December 2016.

 d)     GST RELIEF ON PROCUREMENT OF THE EDUCATIONAL RELATED EQUIPMENT

Relief will be given on the procurement of teaching materials and equipment by skills and vocational training centres which conduct approved and accredited programs under the National Skills Development Act 2006.

The proposal is effective 1 January 2016.

 e)     GST RELIEF ON RE-IMPORTATION OF CERTAIN EQUIPMENT

Relief from payment of GST on re-importation of:

    • Eligible equipment temporarily exported under rental and lease outside the country for upstream oil and gas industry. The list of equipment and conditions are approved by the Ministry of Finance; and
    • Goods temporarily exported for the promotion, research or exhibition purposes

          The proposal is effective 1 January 2016.

 f)     WAREHOUSING SCHEME

Section 70(1) of the GSTA, will be amended to expand the scope of warehousing scheme by suspending GST on the imported goods when deposited in the warehouse and disregarding supplies of goods made between the warehouses.

The proposal is effective 1 January 2016.

g)      CHANGE IN TIME OF SUPPLY PROVISIONS FOR IMPORTED SERVICES

Section 13(4) of the GSTA will be amended to expand the time of supply for imported services at the earlier of the following dates:

    • The date when any payment is made by the recipient; or
    • The date when any invoice is issued by the supplier who belongs in a country other than Malaysia or who carries a business outside Malaysia

The proposal is effective 1 January 2016.

 h)    PENALTY ON LATE PAYMENT OF GST

Section 41 of the GSTA will be amended to impose a penalty, if the taxable person fails to make payment for the tax due and payable. The minimum penalty will be from 5% up to a maximum penalty of 25% of the amount of tax due and payable based on the number of days delay.

Subsection 43(1) and 43(8) of the GSTA will be amended to empower the Director General to assess and recover the amount of tax due including penalty imposed under new subsection 41(8) of the GSTA.

The proposal is effective 1 January 2016.

 

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