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Critical Update: The impact of Finance Bill 2015 on GST Operation

I think this is the most frequent period that I write an article about GST. My last article was released on October 2015, while I read Finance Bill 2015. Subsequently DG8/2015 was released on November 2, 2015.

This article is to focus on the impact on GST operation based on the content of Finance Bill 2015. Please download the original Finance Bill 2015 from Parliament Malaysia Official Portal. It is located at House of Representative | Bill section. D.R 32/2015 refers to Finance Bill 2015. The bill is to be tabled in the third meeting of the third session of Thirteenth Parliament 2015. The Finance Bill 2015 has made a number of amendments to the existing Acts.  

This article discusses on the GST implication after the amendment into various Acts. Please take note that the bill is yet to pass third reading and gazette into the Act. There may be changes to the Bill from time to time. In addition, different readers may have different opinions on the interpretation of the laws.

The amendments in the following Acts affect GST operation that was started from April 1, 2015:

  • Income Tax Act 1967
  • The Petroleum (Income Tax) Act 1967
  • Real Property Gain Tax 1976
  • The Promotion of Investment Act 1986
  • Goods and Services Tax 2014

Other amendments not related to GST will not discuss here.

I have the following summary after interpreting the contents of Finance Bill 2015.

  1. Voluntarily waived to claim input tax credit will not be deductible for income tax purpose
  2. GST Block and GST Expenses from deemed supplies are deductible
  3. Output tax being absorbed by GST registrant will not be deductible for income tax purpose 
  4. All types of qualifying expenditures and capital expenditures shall exclude input tax credit
  5. Adjustments to be made to qualifting expenditures and capital expenditures due to capital goods adjustment and disposal treatment of capital goods
  6. Imported Services on Reversed Charge Mechanism is at the earlier of invoice date or payment date
  7. Warehousing Scheme is including imported goods directly deposit into warehouses
  8. Late payment penalty clauses are imposed into GST

The above statement is the primary understanding of the Finance Bill 2015. Please download my presentation slides attached for document supports.

Please do not hesitate to send me email if you have constructive suggestion on the interpretation of the Finance Bill 2015.

 

Attachments:
Download this file (6-Summary of Finance Bill 2015-GST-Impact.pdf)Summary of Finance Bill 2015[GST Impact Analysis]2021 kB

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GST System Changes