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Industry Guide:

Development Financial Institution

 
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FREQUENTLY ASKED QUESTIONS

GST Registration 

1. Tekun Nasional provides financing and support services to small entrepreneurs as mandated by the government. Is Tekun Nasional required to be registered under GST?

In order to be registered under GST a person should make taxable supplies that exceeding the prescribed threshold of RM500,000. Since the entrepreneurship development and support services are fee based services, Tekun Nasional must be registered its business under GST once the turnover has exceeded RM500,000. However Tekun Nasional can also register his business voluntarily under GST if the turnover is below the threshold. 


Supplies made by Development Financial Institutions 

2. What is the GST treatment for the funding to Malaysian entrepreneurs for the purpose of setting up or expanding Malaysian restaurants overseas? 

The provision of financing and the processing fee imposed to the overseas customer is treated as a zero-rated supply. 

3. Agro Bank gives souvenir items such as coin box, pencil box, cap, etc. as free gifts to new depositors for opening a savings account. Are these free gifts subject to GST?
 

Free gift items are subject to GST at a standard rate. However, under business gift rule, the banks are not required to account for output tax on the gifts (goods) to depositors provided the cost of the gift does not exceed RM500.00. 

4. Bank XYZ provides Premium Savings Certificate (PSC) scheme whereby lucky draw prizes such as luxurious cars, travel package, camera, PSC certificate and cash will be given away to customers. Are these free prizes subject to GST?

Such goods or services given away in the form of luxurious car, travel package and camera as prizes to PSC winners are taxable supply and subject to GST at standard rate. However, the PSC certificate and cash are not subject to GST. 

5. Credit Guarantee Corporation provides a guarantee scheme to SMEs who have been awarded with the government or government linked agency’s contract. What is the GST treatment on the guarantee scheme?

The guarantee scheme is not subject to GST but the fee imposed for the issuance of the guarantee is subject to GST at a standard rate. 

6. Are advisory or consultancy services provided by the Malaysian Industrial Development Finance Berhad (MIDF) subject to GST?

Advisory or consultancy services are taxable supplies and subject to GST at a standard rate. If the service is provided free it is a not a supply and not subject to GST. 
 

7. Perbadanan Usahawan Nasional Berhad (PUNB) provides courses for SMEs and charges a minimal fee. Is the fee subject to GST?

The fee charged is subject to GST at a standard rate provided PUNB is registered under GST. 


Acquisitions made by Development Financial Institutions 

8. Are grants received by Development Financial Institutions subject to GST?

Grant is a not a supply and not subject to GST. 


Accounting for tax 

9. MARA provides seminars or workshops for entrepreneurs and individuals undertaking its financing scheme or the general public for a fee. Entrepreneurs and individuals pay at the lower rate than the general public. How do I account for GST?

If discounts are given to entrepreneurs and individuals undertaking its financing scheme, GST is accounted on the discounted fee. 

10. Can MARA claim input tax incurred in respect of medical and hospitalisation benefits of its employees?

MARA is not entitled to claim the input tax on medical and hospitalisation expenses since these are blocked inputs. 

11. Can MARA claim the input tax incurred in relation to entertainment expenses to existing clients?

MARA is allowed to claim the input tax incurred since business entertainment expenses to existing clients are claimable. 


 
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L & Co Plt.

Johor
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