GST is a broad-based consumption tax covering all sectors of the economy i.e
all goods and services made in Malaysia including imports except specific goods
and services which are categorized under zero rated supply and exempt supply
orders as determined by the Minister of Finance and published in the Gazette.
Scope of Charge
GST will be charged on any supply of goods and services if the following
conditions are satisfied:
1.
2.
3.
4.
it is made in Malaysia;
t is a taxable supply of goods or services;
it is made by a taxable person; and
it is made in the course or furtherance of any business carried on by that
taxable person.
A taxable supply is a supply which is standard rated (6% under current proposals)
or zero rated, whereas exempt and out of scope supplies are not taxable
supplies. GST can only be levied and charged if the business is registered under
GST. A business is not liable to be registered if its annual turnover of taxable
supplies does not reach the proposed prescribed threshold of RM500,000.
Therefore, such businesses cannot charge and collect GST on the supply of goods
and services made to their customers. Nevertheless, businesses can apply to be
registered voluntarily.
Properties Acquired From Property Developers
Even though it has been proposed that residential properties are deemed to
be exempt supplies (ie. the developer cannot charge housebuyers GST), you
will realise that from the above diagram, the developers will still be subject
to GST on the construction materials and supply of various services. As the
developers will have to pay for the input tax (ie. GST) on those construction
materials and other services, they are unable to claim output tax as GST is not
imposed on residential properties. Consequently, the GST element of the costs
of construction would eventually be passed on to the housebuyers. In the case
of commercial properties, the developers will have the relief of claiming GST
incurred as input tax as they are able to charge output tax (GST) on the buyers. In
the case of a mixed development of both residential and commercial properties
by a developer, the proportion of GST incurred in relation to the construction of
residential properties cannot be passed on and absorbed by the construction of
commercial properties either.
Some may argue that cost of const