Malaysia Goods And Services Tax (GST) Penalties

Goods And Services (GST) Penalties may be imposed if the following offences are committed:

  • Any deficiency on the net tax payable (GST return inaccurately reported)
  • No GST return is made (Failure to submit)
  • A GST return is submitted without payment or a lesser payment (No payment made)
  • Any refund paid to which there is no proper entitlement (Wrong calculation on input tax credit)
  • Failure to register (even sales more than RM500,000)

The following are the detailed GST offences and relevant GST penalties:

Malaysia Goods And Services Tax (GST) Penalty

Late GST Registration Penalty

Common GST Errors:

  1. Charging local customers standard-rate GST (i.e. GST at 6%) when services provided to them could be zero-rated (i.e. GST at 0%).
  2. Charging overseas customers zero-rate GST (i.e. GST at 0%) when services provided to them could be standard-rated (i.e. GST at 6%).
  3. Omit to report export of goods not supported by sales (e.g. samples, goods returned, consignment, overseas repair and loan of equipment) as zero-rated supplies in GST returns.
  4. Exclusion of festive gifts (e.g. hampers and moon cakes), dinner & dance prizes and the free use of business assets for private purposes from standard-rated supplies classification even though they meet the deeming conditions.
  5. Omission of 6% GST on the disposal of fixed assets or trade-in of assets within Malaysia.
  6. Multiplying taxable purchases by 6% to arrive at the GST input tax amount.
  7. No attribution of input tax incurred for exempt supplies or non-business activities.
  8. GST claims on supplier’s invoice denoted in foreign currency based on your own in-house exchange rate.

4 Ways to Avoid GST Non-Compliance Penalties:

  1. Conduct a GST Assisted Compliance Assurance Program (ACAP) audit
  2. Conduct regular GST Health-Checks
  3. Seek evaluation from a professional GST advisor
  4. Conduct a GST Assisted Self-help Kit (ASK) review