DG Decisions

Malaysian Customs released two new DG Decisions this month. For those of you who are not familiar with DG Decisions (Officially referred to as Director General of Customs Decisions) these comprise guidance issued by RMCD on its view in relation to various GST matters. Whilst these are not public rulings they do provide insights into the view and approach taken by Customs, as well as provide an insight into issues that may be considered to be common to a number of taxpayers.

In reviewing these DG decisions, please do so with some sense of caution in that few of them set out either the full facts that may have been put to RMCD, (as some may be commercially sensitive, or might identify the taxpayer concerned), and none set out detailed legal justification for the decisions. If you wish to rely on any DG Decision, it may be advisable for you to check with your advisors first as to the risks that you might face.

We have provided links to relevant DG Decision and highlighted some of the key issues covered.

DG's Decision 6/2015 (07.07.2015)

  • A tax invoice should not be issued for an out of scope supply or an exempt supply. If the transaction involves both taxable and non-taxable supplies, the tax invoice required must separately identify each type of supply (e.g. standard rated, zero-rated, exempt
  • A tax invoice should also be issued for any taxable supplies that are disregarded or have been given relief. The most obvious application of this would be where supplies made within Designated Areas. However, there can be a wider application, potentially even applying to transactions within GST Group members. This is likely to pose an administrative and systems challenge for businesses.

DG's Decision Amendments 4/2015 (13.07.2015)

This was an amendment to an earlier DG Decision and some of the critical changes include:

  • Relaxation of the tax invoice issuance requirements. Previously RMCD required tax invoices to be issued within 30 days from the date of supply, but this has now been amended to 30 days from receipt of payment from the customer.
  • published foreign exchange rates as allowed by RMCD for converting tax invoices into ringgit for taxable supply made in Malaysia has been extended to include, amongst others, the choice of selling rate, monthly average rate, month end selling rate etc. The rate to be used has to correspond with the time of supply.

Relief Order

This month the Minister issued his second Relief Order : Minister's Relief 2/2015 –

The Relief Order provides concessional treatment to Free Industrial Zone ("FIZ") companies and Licensed Manufacturing Warehouses ("LMW"). Essentially it remove the requirement for FIZ and LMWs to account for GST on any transactions between it and other FIZs or LMWs.

These concessions follows the first Relief Order issued in March which gave concessions to FCZ effectively removing GST from any supply of goods within an FCZ.

These Relief Orders effectively return the concessional treatment that existed for FCZs, FIZs and LMWs under the previous sales tax regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.