Join Our Team
Come grow with us
and explore endless
opportunities
 
View More »
 
 

Our Company Profile

Learn more about our company and know more about our services.
 
Learn More »
 

Industry Guide:

Advertising Services

 
Please click here to download complete guide

 

FREQUENTLY ASKED QUESTIONS


Registration

1. Who is liable to be registered?

All media owner or advertising agencies or production houses, whether they are companies, partnerships or self-employed individuals are liable to register if their annual turnover taxable supplies exceeds the threshold in the past 12 months or within the future 12 months. 

2. If my annual turnover of taxable supplies does not exceed the threshold, may I apply to be registered?

You may apply for voluntary registration, but once registered you must remain registered for a minimum period of two years. 


3. What types of advertising services are subject to GST? 

The provision of advertising services is a standard rated supply. Thus, all advertising services are subject to GST. Such advertising services includes :-
(a) airtime advertisement through radios and television.
(b) the right to place advertisement on a billboard.
(c) advertising time or space in any publication and newsprint.
(d) promotional activities such as an entry in a telephone enquiry directory and advertising space in any electronic location.

Meanwhile, for the creative agencies that provide creative artwork services is a standard rated supply.

4. What constitutes my taxable turnover?

Your taxable turnover includes commissioner other fee based charges received from your clients. For media owner, it includes advertising sales and sales through newspapers, magazines, bulletins, billboards, TV, radio, mobile phone or internet (digital form). 

5. As an advertising agency acting as a principal, how do I account for GST?

GST constitutes on the selling price, including the cost of advertising space or time. 

Example:

ABC Sdn Bhd engaged local advertising agency, Syarikat Pengiklanan Haslim to act on his behalf as a principal to advertise their product in the local newspaper. Syarikat Pengiklanan Haslim values his work as follows :

Cost of advertising time or space :  RM 8,000 
Advertising fee : RM 3,000 

The amount of GST chargeable to ABC Sdn Bhd by Syarikat Pengiklanan Haslim is RM660 (RM11,000 X 6%), which is output tax to Syarikat Pengiklanan Haslim.

The amount of GST chargeable by local newspaper (media owner) is RM480 (8,000 X 6%), which is Syarikat Pengiklanan Haslim’s input tax. 


Time of supplies 

6. When do I have to account for GST?

You have to account for GST at the earliest of the following:
(a) when the advertising service is performed,
(b) when payment is received, or
(c) when the tax invoice is issued.

7. When is the basic tax point for “Media Owner” and “Creative and Production Services”? 

The basic tax point for advertising services providers are as follows:
(a) Media Owner
i. When the circulation takes place i.e. when it was viewed or broadcasted.
(b) Creative and Production Services ii. When the creative work and artwork is created and accepted.



Place of supply

8. Hotel Sri Malaysia places a booking with a media owner to air an advertisement in Malaysia on its worldwide hotel chain. Whether the sale of airtime subject to GST?

The sale of airtime is subject to GST at standard rate as the circulation of the broadcasting is in Malaysia. 

9. I am an advertising agency registered in Malaysia and I provide advertising services in Malaysia. Do I have to account for GST?

Yes, all advertising services provided and circulated in Malaysia, are subjected to GST at standard rate regardless whether the supply is made to a local or anoverseas customer. For TV and radio broadcasting, advertisement placed on TV and radio channels in Malaysia are considered to be made in Malaysia and it is standard rated supply. This is because these TV and radio channels are aired mainly in Malaysia. For media sales advertising through mobile phones, the place of subscription of the telephone line is used as a proxy to determine the place of circulation. If an advertisement is sent to subscribers of local telephones, the circulation is in Malaysia and such supply is standard rated. However, if the circulation of media advertisement is outside Malaysia, the supply is zero-rated.

10. If I am an advertising agency registered in Langkawi and provide billboard advertising in Langkawi, do I have to account for GST?

No, advertising services provided inside these islands (Langkawi, Tioman and Labuan) are not subject to GST. These islands are called designated area. Services supplies inside the designated area are treated as no tax chargeable. Even though these supplies are treated as no tax chargeable, the advertiser can claim input tax incurred in providing advertisement services in the designated area. 

11. If I am an advertising agency registered in Langkawi and provide media sales advertisement in Langkawi, do I have to account for GST? 

No, advertising services provided inside these islands (Langkawi, Tioman and Labuan) are not subject to GST. These islands are called designated area. Services supplies inside the designated area are treated as no tax chargeable. Even though these supplies are treated as no tax chargeable, the advertiser can claim input tax incurred in providing advertisement services in the designated area. 

However, for regional circulation of media advertisement, the supply is considered to be substantially circulated outside designated area if at least 51% of the total circulation of the same media advertisement through physical or digital media is circulated outside designated area. The 51% rule applies only to publication of the same version or edition for distribution to multiple areas or countries. Magazines or newspaper with the same content printed in different languages or with slight modifications for distribution in different countries cannot be regarded as the same version or edition.

For media sales of airtime such as through television and radio, the 51% rule applies only to the same advertisement aired simultaneously in designated area, Malaysia and oversea (if any).

12. What is the GST treatment for providing media sales for advertisement circulated both in Malaysia and overseas by the advertising agency registered in Malaysia?

Generally, if the supplies involves a mixture of standard rated and zero–rated supplies, 51% rule circulation is applies and the entire media sales advertising can be zero rated if at least 51% of the circulation is outside Malaysia. 


13. What are the GST implications if I am an advertising agency registered in Malaysia and provide media planning services arranging for foreign client to advertise their product?

The provision of services to foreign client for arranging advertising services overseas is a zero-rated supply. 

14. What happens if a local company advertises his products directly in overseas newspaper without using advertising agency? 

The supply of advertising overseas is considered out of scope. Local company getting imported services has to account for GST by way of imported services.

15. If an oversea advertising agency has a contract with the local client to advertise their product in a local media TV station in Malaysia. That oversea advertising agency appoint a local advertising agency in Malaysia to arrange all the advertising work, advertise the product and then bill local client directly. How should GST be accounted? 

The media owner must account for GST at standard rate for the advertising space provided to local advertising agency and the local advertising agency must account for GST for the production work provided to local client. However the commission charged to the oversea advertising agency by local advertising agency is not subject to GST because the supply of services by local to overseas agency is zero rated.

16. An overseas restaurant owner places an advertisement in local television station to promote their restaurants outside Malaysia. Is the supply of advertising space in the local television station subject to GST?

Yes, the media owner must account for GST because the provision of advertising space in Malaysia is a standard rated supply even though it is related to land and building outside Malaysia. 

17. XYZ is multinational company with branches in Asia and headquarters in Malaysia. The multinational company appoints a Malaysian advertising agency to do media planning services and to advertise in Hong Kong, Indonesia and Japan. The Malaysian advertising agency later appointed advertising agencies in Hong Kong, Indonesia and Japan to arrange the advertisements in those countries. Is the Malaysia advertising agency subject to GST when it invoices XYZ company for the services render?

The provision of media planning services by the Malaysian advertising agency to XYZ is subject to GST because the services are provided to XYZ in Malaysia. Malaysian advertising agency has to charge and account GST on his supply at standard rated. However the supply of advertising in Hong Kong and Indonesia are not subject to Malaysian GST because the services are provided outside Malaysia and considered zero rated supply.

18. What is the GST treatment for media planning services registered in Malaysia provides a services to the overseas holding company’s client?

If the media planning provider have a contract with overseas holding company to do media planning to its group companies (to provide services such as market studies, choosing advertising media, time and frequency of advertising; etc), the contracting party is the immediate recipient who will directly benefit from your services. Hence media planning provider can zero rate the services. 

19. An overseas agency, SH Agencies has a contract with a Malaysian client. SH Agencies engages a local agency KS Media to buy advertising space in Malaysia and bill directly to the Malaysian client. What is the GST treatment with regards to the above?

KS Media will zero rate the service fee charged to SH Agencies for media planning. Any services provided by the Malaysian media owner to broadcast the advertisement in Malaysian is standard rated.

20. JL Creative Works does creative and production work for a Malaysian client, who uses the production work for use in advertising overseas such as in his overseas website, or for filming work overseas.

The creative and production work is standard rated because it is provided to the client in Malaysia, even though the advertising work will be used overseas.

21. JL Creative Works a creative agency is appointed by ABC Sdn. Bhd as the sole agency to provide creative works for all its advertising campaigns in ASEAN countries. Most of the productions are carried in Thailand. Is GST chargeable on the creative and production costs?

The services are provided contractually to Malaysian’s company (ABC Sdn. Bhd).Creative works are not directly in connection with advertising media in circulation. Even, the fact that the production may take place in Thailand (outside Malaysia), this supply do not qualify for zero rating.GST is chargeable on the creative and production costs at standard rate. 

22. What is the GST treatment on advertisements on in flight magazines and media? 

Such advertisements are zero rated if they are provided to b circulated outside Malaysia. 



Advertising to Charities

23. What happen if the advertising agency is acting as a principal and provide advertising services to approved charities?

When a charity uses an advertising agency to supply advertisement services, the GST liability is decided whether the advertising agency is a principal or an agent. If the advertising agency acts as a principal, the supply of advertising time or space (for example television or radio) and production work without any charge to the approved charity will be relief from GST. However the supply of advertising time or space by media owner to the advertising agency will be standard rated.

24. What happen if the advertising agency is acting as an agent and provided advertising services to charities?

When an advertising agency acts as an agent, the agency fees charged to the media owner is subjected to GST. However, the media owner (for example television or radio) has to issue the bill directly to charity to be eligible for the GST relief treatment.

25. Does advertising on a charity’s web-site qualify for GST relief?

No, the charity has to account for GST.

26. In relation with question above, how does the charity account for GST if there is no monetary consideration?

You must account for GST based on open market value.



Sponsorship

27. What happen if a company gives me monetary sponsorships and in return I (media owner) provide advertising in my own web-site? Am I subject to GST?

The supply in the form of monetary is not subject to GST. But if in return you provide advertising for your supply, you must account for GST based on open market values. In case the open market value cannot be ascertained, the media owner has to account GST based on the money the media owner receives. 

Example 

ABC company sponsors YY (charities bodies) RM5,000.00 for a concert at KS Cafe organised by YY and in return, YY provide the sponsor a free page to advertise the sponsor’s name or products in the YY’s web-site, YY have to account for GST based on open market value of the free page. Assume the open market value to advertise in the web site is RM500.00 for a page. So you have to account GST RM28.30 (RM 500.00 x 6/106).
 

28. If waive the pitch fee upon securing a contract, can I recover the GST portion?

You may recover the GST paid by making adjustment in your GST returns after issuing a credit note to your client.



Licenses

29. Advertising agency or individual pay to the Land Office a fee for temporary occupation of land to be allowed to place billboard advertisement? Is this fee subject to GST?

No, this Temporary Occupation License fee is imposed by the Land Office which is outside the scope of GST.

30. Advertising agency or individual pay a fee to local authority to get a permit for billboard advertising. Is this fee subject to GST?

The fees for this permit imposed by local authority is not subject to GST because it is imposed for regulatory and enforcement purpose. 



Complimentary Copies 

31. Are complimentary copies of magazines given to readers, other persons or potential clients subject to GST?

Such complimentary copies are regarded as business gifts are are not subject to GST. However, it is restricted to a value of RM500 per person per year.

32. If media owners give complimentary copies of current issue to an advertiser who placed an advertisement in that issue, does he have to account for GST? 

No, it is not subject to GST because it is part of the advertisement package supplied.
 
<< Back to Industry Guide
 
 

L & Co Plt.

Johor
18A & 20, Jalan Sasa 2, Taman Gaya, 81800 Ulu Tiram, Johor, Malaysia.
Tel +607-859 0410
Fax +607-863 1003
Penang
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
 
     

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
www.ict.com.my
 
  External Audit   Income Tax Submission   GST Consultancy   Tax Incentive Application   Corporate Advisory   Income Tax Audit   GST Submission  
                             
  External
Audit
  Income Tax
Submission
  GST
Consultancy
  Tax Incentive
Application
  Corporate
Advisory
  Income Tax
Audit
  GST
Submission