Beware of blocked GST import tax credit
Published on: Sunday, March 22, 2015
Alor Setar: KOTA KINABALU: If you or your company are registered for GST, you have to take note of that certain input tax credit will be disallowed or blocked by the Customs on certain purchases, regardless of whether or not they can be attributed to a taxable supply.Blocked input tax items include the purchase or lease of a passenger motor car not used wholly for the purposes of business. The Customs on checking may stipulate conditions which must prove that a vehicle is used wholly for the purposes of business.These include (but are not limited to) the vehicle is not taken home at night or during weekends by your employees and the vehicle should display the name of the firm or business. A lot of people will think that the Customs will not have the time or enough personnel to check on such cases.ADVERTISEMENT Others include recreational or sporting club subscriptions, entertainment expenses (except for those incurred in relationship to existing customers or employees), medical or personal accident insurance, medical expenses for employees and other family benefits.The ability to claim for GST suffered on purchases of goods and services is a fundamental feature of GST that should reduce the cost of doing business in theory.Conditions to claim input tax include that the business claimant is a taxable person, the claim is supported by a valid tax invoice which must be issued under the legal name of the business, and the goods and services acquired are not blocked or subject to any input tax restriction.An invoice is a notice of an obligation to pay. A tax invoice can be issued in addition to an ordinary invoice or as a replacement for an ordinary invoice.ADVERTISEMENT A tax invoice substantiates the amount of GST charged and consequently the input credits that a business or entity may be able to claim.Without a valid tax invoice, registered entities will not be able to recover the GST included in the price paid for goods and services they acquire for use in carrying out their businesses.
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Tax invoices are generally issued when the services are performed or payment has been received.A person cannot recover input tax credit when they make exempt supplies.Your GST registration number is required to be quoted on all tax invoices that are sent to customers.Similarly, tax invoices received by a GST registered entity should contain the GST registration of the issuer of the documents.If you are a GST registered entity, you are required to submit a GST return to the Customs based on your taxable period. For annual turnover of RM5 million and above, the taxable period is one month. For annual turnover of less than RM5 million, the taxable period is three months.For example, you must ensure that the Customs receive your return not later than one month after the end of your prescribed taxable period.For example, Customs must receive the GST return for the month ending April 2015 by the last working day of May 2015. Remember that in Sabah, May 30 and 31 are normally Harvest Festival Holidays.You can submit the GST return through electronically, by posting to the GST processing centre or by hand furnishing to the stipulated GST centre.The payment of GST payable can be made by electronic fund transfer, cheques, bank drafts, money order or postal order.In your return, you will indicate the total value of your local Malaysia sales, exports and purchases from GST-registered entities, GST collected and GST claimed for that accounting period.Stay up-to-date by following Daily Express’s Telegram channel.
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If you have not performed any services in the period and have no input tax credits to recover or output tax to declare, you must still complete all boxes on the return forms as 'zero' or 'nought'. You must still submit a 'nil' return by the due date.