VAT Registration In Malaysia
The Malaysian VAT/SST system is largely modeled on the UK VAT. Primarily, the VAT/SST is a consumption tax on goods and services. The main concept of VAT in Malaysia is that only the value added to goods or services is going to be taxed. The VAT system is projected to make sure that the VAT price is ultimately paid by the final consumer and that it is not an additional burden for companies in the value chain.
Mandatory and voluntary registrations are available and the latter applies in case of taxable goods that are below the threshold or in case of persons who were exempt from registration but choose to undergo this step. The turnover for the 12-month period can be calculated based on the past value of the taxable goods or according to a future projection.
What types of businesses are subject to VAT?
The type of supplies which are liable to the standard VAT rate in Malaysia are local supplies of goods and services which are not rated at a zero VAT taxation, exempt or granted relief, as well as imported goods and services. In general, companies are liable for VAT registration in Malaysia, however, in some cases, they are exempt from registration.
Businesses to which this rule applies are the following:
• companies that manufacture non-taxable goods;
• a manufacturing company that is situated below the registration threshold;
• a sub-contractor manufacturer to which the registration threshold applies;
• manufacturing companies that are expressly exempt from registration, such as those in the tailoring field, opticians, jewelers, and others.
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