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Industry Guide:

Approved Jeweller Scheme

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GST on importation

1. I am an approved jeweller and if I import precious metals, do I have to pay GST upfront on the importations?

As an approved jeweller, you are automatically eligible to apply for the Approved Trader Scheme (ATS). Under ATS, the payment of GST on importation of goods is suspended. However, the suspended GST needs to be declared in the GST return for the taxable period in which the suspension relates. If you do not have an ATS approval, you have to pay GST upfront at the point of importation but the GST paid is claimable as your input tax credit. 

2. I operate a gold bullion house and import precious metals from overseas. Can I apply for ATS status to suspend the payment of GST on such importations?

The ATS is meant for major re-exporter. If you fulfill all the criteria imposed under the ATS, you can apply to be in the scheme. If you are not in the ATS, your importation of precious metals will be subject to GST. 

3. I operate a gold bullion house and supply prescribed precious metals to local jewellery manufacturers. Do I need to charge GST if a buyer is not an approved jeweller?

Any local supplies of prescribed precious metals to a person who is not an approved jeweller is subject to GST.

4. How do I distinguish whether a buyer is an approved jeweller?

An approved jeweller would possess a valid AJS approval issued by the Royal Malaysian Customs. The approved jeweller would have to show proof when purchasing prescribed precious metals to qualify for exemption of GST on the purchase. If you have any doubt, you can always check with our website or contact our department to verify the authenticity of the approval.

5. As a banker, how should I issue a tax invoice to an approved jeweller and non-approved jeweller?

For a non-approved jeweller, a tax invoice issued must show particulars as stated in Regulation 22 of the GST Regulations 2014. Tax must be charged and shown separately. Similarly for a banker or bullion house, a tax invoice issued to an approved jeweller must show particulars stated in the GST regulations. However, the tax invoice issued to an approved jeweller must also contain the following statement, “The buyer as stated in this invoice shall account for the output tax on the supply to the Director General in accordance with section 73 of the Goods and Services Tax Act 2014”.

6. I am an approved jeweller. Must I show proof on my AJS status each time I purchase gold bars from the bank?

Yes, otherwise the bank will charge you GST on the supply of precious metals and you have to pay the GST to the bank. 

7. As an approved jeweller, am I also allowed to purchase without payment of GST on acquisition of materials other than prescribed precious metals, like chemicals and casting powder?

No, the AJS status would allow you to purchase without payment of GST on the acquisition of prescribed precious metals only but not on any other materials.

8. As an approved jeweller, am I allowed to purchase without payment of GST on acquisition of gemstones which are also of high value? 

No, acquisition of gemstones does not come under the AJS. As such you are not allowed to purchase without the payment of GST on acquisition of gemstones. 

9. I am a jeweller and sometimes I purchase trade-in jewellery from my retail customers. Do I have to pay GST on such purchases? 

If your retail customers are GST registered persons, they will charge you GST on your purchases. If they are not registered, then the acquisition is not subject to GST. 

10. I am a jewellery retailer and I sometimes acquire trade-in second-hand jewellery from walk-in customers. If I resell this jewellery without remanufacturing it, do I have to account for GST on such sales?

Such sales are still considered as taxable supplies, even though the jewellery is second-hand jewellery, and you have to account for output tax.

GST implications on toll manufacturing activities for overseas principals.

11. I am a toll manufacturer with AJS status. Do I have to pay GST on gold bars which I received from my overseas principal?

You can suspend the payment of GST at the time of importation if you have acquired an ATS status. Otherwise, you will have to pay GST upfront on such importation of gold bars. 

12. If I import gold bars on behalf of my overseas principal, who should declare these gold bars?

You should declare the importation of these gold bars under your name and be accountable for the importation. However, you can still suspend the payment of GST on such imports under the ATS. 

13. If I acquire precious metals locally to manufacture jewellery for my overseas principal, should I pay GST on the prescribed precious metals?

If you have AJS status, you have to account the amount of GST on such acquisitions but you are not required to make payment. When you export the finished goods (jewellery) to your overseas principal, you can zero-rate the export. 

14. When I deliver the finished goods (jewellery) to my overseas principal, do I have to charge him any output tax on the value-added activities which I performed?

If you have ATMS status, any value-added activities, including workmanship, carried out by you for your overseas principal are to be disregarded. However, you have to charge GST on such supply if you are a registered person but with no ATMS. 

15. Who would be liable if the local customer of my overseas principal failed to do “recipient self-accounting” under ATMS on deliveries made to him or account for output tax on local supplies he made?

If the goods are already received by the local customer, the liability to account for tax on such goods lies with him. If he failed to do “recipient selfaccounting” or account output tax on any supply made by him, the local customer would be held liable and accountable for any tax that are payable or due.

16. I am a local customer for an overseas supplier. When do I have to do “recipient self-accounting” on the finished goods that I received from the toll manufacturer?

You have to do “recipient self-accounting” when you make payment to your supplier or when you received a tax invoice from your supplier for the consigned goods, whichever is the earlier. 

Record keeping

17. What are the records that need to be maintained?

All original documents and records related to the supplies, receipts and acquisitions of raw materials and finished goods supplied under the AJS. 

18. What does a “good accounting system” mean under the AJS?

A good accounting system means maintaining of proper accounts and inventory records for tracking and accounting of raw materials that were acquired under the AJS. It also includes proper accounting on work-inprogress, stocks on hand and finished goods disposed off to both the local and overseas markets. All accounting records must be supported by related original documents and must be kept in accordance with the Principles of Standard Accounting Practices adopted in Malaysia. A good accounting system required of the approved person will be spelt out in the conditions upon approval and must adhere to at all time.

19. When I ceased to be a GST registered person or as an approved jeweller, do I have to account for output tax on prescribed precious metals on hand?

If you are no longer a registered person under GST, you have to account for output tax on all capital assets and goods on hands.

20. What would happen to goods on hand if my AJS status is revoked?

As an approved person under AJS, you still have to account for tax charged on the acquisition of prescribed precious metals by the supplier which you have not accounted for. Any purchase of prescribed precious metals after the date of revocation will subject to GST and you, as a registered person, are allowed to claim the GST incurred as your input tax credit. You may be penalized for any failure to comply with the conditions or the requirement of the law

21. When I transfer my business as a going concern can I also transfer my AJS status to the buyer?

Approval granted under the AJS is not transferable. Transferee who is eligible for AJS status and wish to enjoy AJS treatment should apply for AJS status before the transfer is made.

22. Do I still have to account for GST on prescribed precious metals that are lost or found missing?

For any prescribed precious metals supplied under AJS that cannot be reconciled with the quantity supplied and the balance at hand, you have to account for output tax on such discrepancies.

23. What is the duration of an AJS approval and when should I renew it?

Approval for AJS status is on a two-yearly renewal basis or for a shorter period, as the case may be, and any application for renewal must be made within six months before the expiry of each approval period.
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