Details and Scope of Goods & Services Tax


The much sought after details and scope of the Goods and Services Tax (GST) have been released by the Custom Department. GST will be implemented from 1 April 2015.

The current sales tax and service tax will be abolished and be replaced by a consumption tax based on the value-added concept known as Goods and Services Tax (GST).

The proposed GST model to be implemented in Malaysia is detailed as follows:Kastam_Malaysia

Scope of GST

  1. GST is to be charged on goods and services at all levels starting from production, manufacture, wholesale and retail;
  2. GST is to be charged on goods and sdervices supplied within the country or imported into the country;
  3. Supplies made by the Federal and State Government departments are not within the scope of GST except for some services prescribed by the Minister of Finance;
  4. Supplies made by the local authorities and statutory bodies in relation to regulatory and enforcement functions are not within the scope of GST; and
  5. GST charged on all business inputs such as capital assets and raw materials is known as input tax whilst GST charged on all supplies made (sales) is known as output tax. For eligible businesses, the input tax incurred is fully recoverable from the Government throught the input tax credit mechanism.

Zero-Rated Supply

Zero-rated supply means goods and services sold by businesses that are charged GST at a zero rate. For such businesses, GST paid on their inputs can be claimed as credits. Examples of goods and services subject to GST at zero rate are:

  1. Agriculture products (paddy and vegetables);
  2. Foodstuff (rice, table salt, sugar, plain flour, milk and cooking flour);
  3. Livestock supplies (live animals and unprocessed meat of cattle, buffaloes, goats, sheep and swine);
  4. Poultry (live and unprocessed meat of chickens and ducks);
  5. Eggs (fresh and salted);
  6. Fish, prawns, cuttlefish, crabs, oysters, cockles and lobsters;
  7. Suply of treated water (excluding distilled water, de-ionised water, oxygenised water and mineral water) to domestic consumers;
  8. supply of the first 200 units of electricity to a domestic household for a minimum period of twenty eight days;
  9. GOods supplied to designated areas (Labuan, Langkawi and Tioman) from Malaysia; and
  10. International services.(Note : the above list is not exhaustive)

Exempt Supply

Exempt supply means goods and services sold by businesses that are exempted from GST. For such businesses, GST paid on their inputs cannot be claimed as credits.  Examples of goods and servies exempted from GST are as follows:

  1. Land used for residential or agricultural purposes or general use;
  2. Building used for residential purposes;
  3. Financial services;
  4. Private education services;
  5. Childcare services;
  6. Private healthcare services;
  7. Transport services;
  8. Tolled highways or bridges;
  9. Funeral, burial and cremation services; and
  10. Supplies made by societies and similar organisations.(Note : the above list is not exhaustive)

Standard Rate

The standard GST rate is 6%


The threshold for purposes of registration under GST is the annual sales value of RM500,000. Businesses below the threshold are not required to register but may register on a voluntary basis.