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:

Societies and Similar Organizations

 
Please click here to download complete guide.

 

FREQUENTLY ASKED QUESTIONS 

1. We are a non-profit organization providing sport and recreation facilities for the community free of charge or at a nominal fee. We receive some grants from the government. Are we required to register? 

Supply of sport and recreation facilities is a taxable supply. However, if this supply of services is provided free of charge, it is regarded as not a supply and is not subject to GST. If you supply these services to community or others for a charge, it is subject to GST. You have to register for GST if your taxable supplies exceed the prescribed threshold.

2. Muzium Kesenian Islam, a non-profit organization charges admission fee to its museum. The museum also obtains income from calligraphy classes, selling of gifts and souvenirs, and renting out its restaurant premise. Is the organization liable to be registered?

Since the museum is making taxable supplies, it is liable to register if its annual taxable turnover in a twelve month period exceeds the prescribed threshold. Taxable supplies made by the museum would also include sales made by its retail outlets, and renting of premises within the premise of the museum.

3. Will an admission fee to entertainment events offered by any society or similar organization (including charitable entity) be subjected to GST?  

Admissions to a place of amusement or recreation charged by any society or similar organization (including charitable entity) will be subjected to GST. These include, among others, admissions to stage and film presentations, exhibitions, sporting events, museums, parks and recreational facilities.

4. What is the GST treatment on advertising services provided by societies or similar organizations?

Societies and similar organizations sometimes sell advertising space in their own brochures, programs, annual reports etc. The sale of such advertising space is a taxable supply and is therefore subject to GST.

5. Are ambulance services provided by societies and similar organizations (including charitable entities) subject to GST?

Ambulance service is taxable supply and subject to GST. If the service is provided free of charge, it is not a supply and not subject to GST. If the ambulance service is provided by a public charitable entity, it is an out-ofscope supply in line with GST treatment for Government.

6. Will first aid courses offered by a non-profit organization such as St. John Ambulance, Red Crescent be subjected to GST?   

The supply of a first aid course by a non-profit organization which relates to its main objective offered to its members and general public free of charge, it is not a supply and not subject to GST. However, if the first aid course is offered to non-members for a charge, it is subject to GST. The non-profit organization has to charge and account for GST if it is a GST registered person.

7. Berjaya Vacation Club charges affiliation fees to affiliated hotels and resorts abroad. What is the GST treatment on this affiliation fees?

Affiliation fees charged by Berjaya Vacation Club to affiliated hotels and resorts abroad are considered exported service and therefore zero-rated.

8. Malaysian Institute of Accountants (MIA) pays affiliation fees to The Chartered Association of Certified Accountants (Association of Chartered Certified Accountants (ACCA), United Kingdom). What is GST treatment on this affiliation fees?  

Affiliation fees paid to international bodies situated outside of Malaysia is not subject to GST.

9. My club organizes golf tournament for members and the general public and charge competition fees. What is the GST treatment on competition fees?  

Competition fees is subjected to GST at standard rate.

10. What is the GST treatment on counseling services provided by a nonprofit organization such as the Befrienders to the general public?

Counseling service is taxable supply and subject to GST at standard rate. If the service provided is free of charge it is not regarded as a supply and not subject to GST. 

11. Are courses conducted by non-profit organization subject to GST?

In house training to members of the non-profit organization is taxable supply and subject to GST at standard rate. If the training provided is free of charge it is not regarded as a supply and not subject to GST.

However, if the non-profit organization outsourced its training to another party, normal GST rules will apply depending on the status of the service provider. If it is a GST registered person then it is subjected to GST at standard rate.

12. Will first aid courses offered by a non-profit organization such as St. John Ambulance, Red Crescent be subject to GST?   

The supply of first aid courses by a non-profit organization is a taxable supply and subject to GST at standard rate. If the course is provided to its members and to the general public free of charge, is not regarded as a supply and not subject to GST.

13. Malaysian Textiles Manufacturers Association (MTMA), a non-profit organization, has been appointed as the authorized body to issue and endorse Certificate of Origin for all textile related products by the Ministry of International Trade and Industry (MITI) since 1990. MTMA charges a fee to its member for endorsement of the Certificate of Origin (CO). What is the GST treatment on this fee?

Endorsement fee is subject to GST at standard-rate.

14. A Sports Club in Kuala Lumpur offers horse riding lessons for a fee. What is the GST treatment on this fee and who should account for GST if the lessons are provided by an employee of the club, a professional or a free-lance instructor?   

Horse riding lessons are taxable supplies and therefore the fees are subject to GST at standard-rate. If the lessons are provided by an employee of the club, then the club itself should account for GST. If the lessons are provided by a professional or free-lance instruct, then such person should account for GST provided he is a GST registered person.

15. X association provides library or resource centre services for members and non-member, and imposes a charge/ fee on these services. What is the GST treatment on this charge/ fee?

GST treatment on the charges/ fees pertaining to library or resource centre services is as follows:

(a) Annual subscription fee, admission charges, non-refundable deposit, photocopying services charges, printing services charges, fax services charges; internet services charges, compensation charges for damages or loss of books or materials borrowed (cost of the books or materials) and reference services charges (to other organizations, university/college students undertaking research) are subject to GST.

(b) Refundable deposit, penalty for damages or loss of books, fine for each book that is overdue and penalty for replacement card are not subject to GST.

16. XYZ organization, a professional association, publishes monthly magazine for subscription at the following rates:  

Rate 

Per Issue 

Per Annum (12 issues)

Malaysia 

RM7.00

RM84.00 

Singapore

RM9.00 

RM108.00

Australia/New Zealand 

RM13.00 

RM156.00 

United Kingdom 

RM16.00 

RM192.00 

United States 

RM17.00 

RM204.00 


(a) Is the subscription for the magazine subject to GST?

(b) How does XYZ account for GST?

(c) During promotion, souvenir items such as umbrella, watch, etc. are given as a free gift to the new subscribers. Are these free gifts subject to GST? 

(a) Yes, the subscription of magazine is taxable supply and subject to GST.

(b) Supply within Malaysia is taxable at standard-rate and supply outside of Malaysia is taxable at zero-rate.

(c) Gifts (goods) given to new subscribers in a promotional campaign, provided the cost of the gifts does not exceed RM500 per person in a year are not required to be accounted for output tax.

17. My organization publishes books, handbooks, compact disc etc. that relates to our aims and main objectives which are given to the public either free of charge or sold at a nominal charge. Are these publications subject to GST?

Publications are taxable supplies and subject to GST (standard-rated). However, if these publications are circulated outside of Malaysia, they are zero-rated.

18. My association rents out rooms, halls and facilities to members and general public. What is the GST treatment on this rental?   

The rental of a room, a hall or facility for weddings, parties and other functions is subject to GST at standard-rate.

19. Is the rental of mailing list subject to GST?  

Yes. Rental of mailing list is a taxable supply of service by your organization. But, if the service is provided to an entity belonging outside Malaysia, this supply of service is zero-rated.

20. My association rents out space for commercial use in the premise. What is the GST treatment on the rental of the space?  

The rental of the space is subject to GST at standard-rate.

21. My association receives donated goods periodically. Excess donated goods are then sold to the general public. What is the GST treatment on these sales?

Sales of donated goods are taxable supplies and subject to GST.

22. XYZ is a trade association which provides the following benefits (supplies) to its members. How is the GST treatment on the following benefits?

(a) Representation of industry's problems and concerns to the Government through representatives in bodies such as MIDA, SIRIM, Task Force on Small and Medium size Industries and others, on issues such as industrial development, technology, trade promotion, quality controls and standards.

(b) Free listing in the annual XYZ Directory of Malaysian Industries, which is recognized as the authoritative handbook on manufacturing companies in Malaysia, and widely circulated in Malaysia and overseas

(c) Assistance to participate in overseas trade fairs and missions such as facilitate members to penetrate export market, issue and endorse certificate of origin etc.

(a) Not subject to GST if XYZ (trade association) represents its members for free.

(b) The sale of the handbook is subject to GST. If the handbook is given free from any charge, then it is not subject to GST.

(c) If XYZ (trade association) charge its members for the assistance given, then it is subject to GST. If the members are not being charge (free of charge) for the assistance given by XYZ (the trade association), then it is not subject to GST.

23. X Furniture Association, a trade association, organizes furniture exhibition overseas for the purpose of promoting the industry that relates to its aim and objective. Are such promotions subject to GST?  

Trade promotion done outside of Malaysia is out-of-scope supply. However, any GST incurred locally in organizing the promotion can be claimed if it involves only administrative work relating to its aim and objective.

24. What is GST treatment on goods and services acquired by charitable entities?

Public charitable entities are given relief from the payment of GST to acquire goods (excluding petroleum and imported motor cars) imported or purchased locally under Goods and Services Tax (Relief) Order 2014 subject to conditions as specified under this Order.

Whereas for private charitable entities, only the entity for persons with disabilities registered with the Social Welfare Department or a private charitable entity registered under the Care Centres Act 1993 can be given relief on the acquisition of selected goods as are listed under items 7 and 8, First Schedule of the GST (Relief) Order 2014 subject to the conditions specified.

25. My club purchases some goods to be given out as souvenirs or lucky draw prizes to club members or employees. What is the GST treatment on these purchases?   

Business gift rule applies for this supply, where a gift of goods made in the course or furtherance of the business made to the same club members or employees in the same year where the cost to the club is not more than RM500 is regarded as non-supply. If the goods cost more than RM500, then it is subject to GST and ITC is claimable.

26. Y Company is a local agent appointed to bring a professional golfer for appearance in the Malaysian Open Golf tournament. The local agent is required to pay appearance fee to the golfer. Is the appearance fee subject to GST and who should account for it?  

Appearance fee paid to professional sportsperson (in this case the golfer) is a consideration for services rendered that is the golfer’s appearance in the event. The appearance fee paid by the local agent to professional golfer is deemed to be imported services and subject to GST by way of reverse charge mechanism. For further information on imported services, please refer to GST General Guide.

27. Associations provide seminars, workshops and conference for its members and the general public for a fee. Members pay at the lower rate than the general public. How do I account for GST?

The fees are subject to GST. For members, GST is to be accounted on the discounted fee.

28. ABC Association, a non-profit organization occasionally invites a foreign speaker to present papers for its seminars, conferences organized for its members and the general public. ABC pays for the speaker’s accommodation, meals and traveling allowances including professional/ appearance fee. Does ABC have to account for GST on such payment?

If ABC is registered under GST, he has to account for GST on the payment made. On the professional fee, it is to be accounted by way of reverse charge mechanism as it is regarded as an imported service.

29. A Football Association in Malaysia, a GST registered person, imports a professional footballer to play for the Association in the Malaysian Football League on a contractual basis. The Association pays a transfer fee to the former employer of the footballer overseas and pay salary and allowances to the footballer while on contract with the Association. What is the GST treatment on the transfer fee, salary and allowances? Who should account for the GST?  

The service by the footballer to play for the Association is regarded as an imported service and the Association has to account for the GST by way of reverse charge mechanism. A contract of employment is not regarded as business. Thus, the salary and allowances paid to the footballer are not subject to GST.

30. My club rents out space in the club’s premises to a restaurant operator and there is a lease agreement which requires a certain amount of deposit to be paid by the restaurant operator to the club. Does the club need to account for GST on the deposit? 

When you enter into a lease agreement, you may collect rental deposit from your tenant as a form of security. You do not have to charge and account for GST on the rental deposit if it is refundable upon completion of the lease term.

However, if you subsequently use the whole part or part of the deposit to offset against any rent payable, this amount is subject to GST. You have to account for the GST at the time you utilize the amount to offset against the rental.

If you forfeit the deposit according to the provisions of the lease agreement where there is an early termination of lease, you do not have to account for GST if it is compensatory in nature. If the forfeiture is a form of settlement for your surrender of right to continue the tenancy with the tenant, you have to account for GST.

31. Are takings from a coin operated vending machine located at an association or club’s premise subject to GST? Who should account for it?  

Supplies from a coin operated machine e.g. snacks and drinks are subject to GST. GST on the takings must be accounted by the person who supplies the use of the vending machine to the customer. GST has to be accounted at the time the coins are removed from the machine. As for the association or society, it has to charge GST to the supplier on rental of the space where the machine is placed or has to account for GST on any commissions received. 
<< 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