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Transfer Business As Going Concern (TOGC)

What is TOGC (transfer business as going concern)?

Transfer business as going concern (TOGC) happened when there is a transfer of a whole or part of a business as a going concern from a taxable person to another taxable person. It is a facility provided to both the transferor and transferee involved in transfer or sale of business.
Under the GST provisions, when a supply of business asset is made as TOGC, such supply of assets by a taxable person (transferor) to another person (transferee) is treat as neither a supply of goods nor supply of services. Consequently, the transferee who receives such transfer of assets shall be deemed to have incurred input tax on the value of the assets supplied to him and to have deducted such deemed input tax from any output tax due from him on the day of the supply made.
TOGC was introduced for the following purposes:
  1. The transferee need not have to pay output tax on the transferred assets and thus alleviate his cash flow burden;
  2. The transferor does not have to account for output tax on the transferred assets; and
  3. It could safeguard government revenue on the output tax which the transferor may default in paying when he ceased business.

Conditions for TOGC

A transfer of business assets can only be regarded as a TOGC when certain conditions are met. Such conditions include:-
  1. On the transfer date, the transferor must be registered for GST while the transferee is either already a registered person or he is a person who is liable to be registered under subsection 20 (4) of Goods & Services Tax Act 2014.
  2. The transferee shall be treated as having carried on such business before as well as after the transfer and any taxable supplies made by the transferor shall be treated as supplied by the transferee;
  3. In the case where only part of the business is transferred to a transferee who is not a GST registered person, then only that part of the business that is transferred shall be taken as having carried on by the transferee before as well as after the transfer for the purpose of computing the prescribed threshold. This may include records, customers, liabilities and assets;
  4. The business transferred must be a going concern before and immediately after the transfer. Any business which has actually ceased operation on or before the transfer date does not qualify for TOGC. However, a short period of break or temporary closure immediately after the transfer to facilitate the smooth transfer might be permissible;
  5. The assets necessary for the carrying on the business must be transferred to the transferee. The transferee must use the transferred assets to continue with the same kind of business of the transferor;
  6. If only part of the business is sold or transferred, that part of business must be capable of separate operation. However, for the new owner, it does not matter whether the transferred business will be operated separately from any other businesses that he is already operating. There must be an actual or current operation. The agreement to dispose of a business yet to commence or a dormant business is not a going concern. The business transferred to the transferee must be in the capacity to continue;
  7. Business or part of the business transferred as a going concern shall be an income earning activity on the transfer date. This income earning activity includes income earned from leasing activity. Examples of non-income earnings include interests and dividends earned;
  8. If a transferor has not really taken much risks in putting a ‘business’ together and cannot enjoy much, or any, reward from the operation of that business, then there may not be a going concern in his hands to have a transfer of; and
  9. If a registered person has not yet made any taxable supplies, the transfer of the business might not be a transfer of a ‘going concern’. However, where sufficient preparatory work has been undertaken prior to making taxable supplies, there may be a business capable of being transferred as a going concern.

Documents Required for TOGC

Royal Malaysian Customs Department (RMCD) will request the applicants to submit the following  documents for TOGC:
  1. Company letter stated:
  1. The details of Transferor and the Transferee (The company name and GST number)
  2. Transfer date
  3. Percentage transfer of the business (Partly/Wholly) or list of the shares/assets/liabilities/etc. transfer to the transferee
  4. Person in charge name and Malaysia contact number
  1. Transferee electricity bill, water bill or tenancy agreement (either one)
  2. Copy of transferee’s bank statement
  3. Transferee’s Company Profile (e.g. Form D for sole proprietor, Form 9, 24, 44, 49 for company (sdn. bhd.))
  4. Transferor’s sales summary (from April 2015 till up to date)
  5. Transferor’s latest 5 or more sales invoices
  6. Agreement / contract / relevant supporting documents regarding the transfer of a whole or part of the business.

What We Can Help You?

We are licensed Tax Agent registered with Inland Revenue Board (IRB) under Section 153(3) of Income Tax Act 1967. As a professional tax consultant, we can advise and assist you in your company or individual income tax compliance and submission according to Income Tax Act 1967, IRB's public ruling, Tax audit & investigation frameworks, Tax technical guideline and etc. We can also advice you on income tax incentives which are available and best suited for you.
We are also GST agent registered with Royal Malaysian Customs Department. We can help you comply with and conform to the GST standards and requirements. Start from registration to preparation and submission of GST return, we can solve all GST technical issues faced by you. We will also advice you on rules and regulation related to your business or company GST affairs.
Our experienced staff will assist our clients with:
  • Registration of GST account with Royal Malaysian Customs Department (Jabatan Kastam Diraja Malaysia);
  • The preparation and submission of all forms and returns on a timely basis;
  • Solve technical issues faced by clients;
  • Advise on rules and regulation related to client GST affairs.

What Our Client Say

L & Co always carry their services in professional way – well planning, in time, precise, friendly and professional. While we are stuck with problems, they can always advice us with industrial best practices and their views.
YM Tan
ICT Automation (M) Sdn Bhd

L & Co Plt.

18A & 20, Jalan Sasa 2,
Taman Gaya,
81800 Ulu Tiram,
Johor, Malaysia.

Tel +607-859 0410
Fax +607-863 1003
Kuala Lumpur
15-2, Dinasti Sentral,
Jalan Kuchai Maju 18,
Off Jalan Kuchai Lama,
58200 Wilayah Persekutuan,
Federal Territory of Kuala Lumpur.
Tel +603-2780 3885
Fax +603-7972 0007
S1-3, 1-21-01,
Suntech @ Penang Cybercity (1575),
Lintang Mayang Pasir 3,
11950 Bayan Baru,
Penang, Malaysia
Tel +604-377 7075
Fax +604-619 2699
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