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Industry Guide:

Approved Toll Manufacturer Scheme

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1. Can any export made by the local customer be taken into account for the purpose of calculating the 80% export rule? 

No, for the purpose of calculating the 80% rule, only consigned goods exported by the toll manufacturer are taken into account. 

Treatment on goods and services locally sourced under ATMS

2. I am a toll manufacturer under the ATMS and if I urgently need to purchase locally some raw materials and components to perform valueadded activities, do I still have to pay GST on such purchases?

Yes, you have to pay GST on the locally acquired raw materials and components but you can claim such GST payment as your input tax credits.

3. If overseas principal bears the cost of raw materials purchased locally and consigned the goods to the toll manufacturer for value-added activities, is there any element of GST on the goods received by local manufacturer?

Local acquisitions of raw materials and components by overseas principal are zero-rated under item 8 of the First Schedule of the GST (Zero Rate Supplies) Order 2014 provided they are delivered to the approved toll manufacturer. Under the ATMS, the local supplier will zero rate the acquisition made by the overseas principal. 

4. Is there any GST implication if services acquired by approved toll manufacturer is contracted to and paid by the overseas principal?

If the toll manufacturer has paid the services rendered by the local supplier, he can then claim the GST incurred as his input tax credit. If the overseas principal bear the cost of the services rendered, the supplies made to the overseas principal under the ATMS will be subjected to GST standard-rated. Supplies contracted to overseas principal which can be zero-rated only cover raw materials and components. 

Treatment on goods imported under ATMS 

5. Are goods imported under the ATMS including components and raw materials allowed to be suspended from payment of GST on importation?

Yes, GST on goods imported by ATMS approved person can be suspended if the approved person has ATS approval. 

6. I am a toll manufacturer approved under the ATMS. If my overseas principal delivers to me some machinery for temporary use, do I have to pay GST on such delivery?

It depends on whether the machinery is brought in as temporary import or normal import. If they are brought in as temporary import, GST is given relief under the GST Relief Order 2014, subject to conditions imposed. On the other hand, if it is declared as a normal import, GST is payable on the machinery at the time of import, unless GST is suspended under ATS.

7. My overseas principal consigns to me raw materials and ownership of the raw materials remains with him. How do I as the toll manufacturer declare to the RMC the value on such raw materials? 

You or your agent must declare the goods imported in the prescribed declaration form (Customs No.1). You must obtain the information (value) from your overseas principal to make such declaration. However, the Customs assessment officer has the power to reassess the value of the goods for customs purposes.

Delivery of value-added goods to overseas principal

8. Are treated or processed goods subject to GST on export?

Since the goods belong to the overseas principal there is no supply made by the toll manufacturer. 

9. Can my overseas principal instruct his freight-forwarder in Malaysia to export goods on his (overseas principal) behalf?

Yes, your overseas principal can appoint his freight forwarder to export goods on his behalf but the prescribed form (Customs No.2) must indicate you as the exporter. You can also appoint a registered forwarding agent to declare on your behalf in the prescribed form but you remain liable and accountable as the principal. 

10. As a toll manufacturer under the ATMS, what is the GST treatment on finished goods delivered to free ports such as Labuan and Langkawi?

Under the GST Act, free ports are classified as Designated Area (DA). Goods supplied to DA from Malaysia will be zero-rated. Hence, a toll manufacturer under the ATMS can zero-rate the finished goods supplied to DA. 

Supply of value-added goods to the local customer of overseas principal under the ATMS

11.  I am a toll manufacturer under the ATMS. Do I have to account GST on the finished goods delivered to a local customer of my overseas principal?

If the local customer is registered together with you under the ATMS, you need not impose GST on such deliveries. The local customer will account the GST payable as his output tax and at the same time claim that amount as his input tax credit if he is a registered person. However, if he is not a registered person, he has to pay GST on the deemed supply made by him.

12. Who would be held liable if the local customer of my overseas principal failed to account for output tax on goods delivered to him (the local customer)?

Once the goods are received by the local customer, it is the responsibility of the local customer to account for any output tax due. If the local customer failed to account for any output tax due, the local customer would be liable for any such overdue GST. 

13.  I am a local customer of the overseas principal under ATMS and I am registered under GST. What is the GST implication on finished goods that I received from the toll manufacturer and subsequently supplied to both the local and export markets?

If the goods are locally supplied, you have to account for output tax and issue tax invoice to your buyers on such local supplies. On the other hand, you can zero-rate the supplies if you export the goods. 

14. What would happen to goods on hand if I ceased to be an approved toll manufacturer under ATMS?

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

15. As an approved person under ATMS, do I have to submit any report to GST office?

Yes, you have to prepare monthly report known as Lampiran B – 0 P.T. GST Bil 2C and submit it to the GST office (controlling station) within 15 days after the end of your taxable period including varied taxable period. The template of Lampiran B – 0 P.T. GST Bil 2C can be downloaded from GST portal. 
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