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Introduction
On 1 April 2015, Malaysia has implemented Goods and Services Tax (GST) to replace sales and service tax. Royal Malaysian Customs Department (RMCD) will conduct audit on businesses from time to time to ensure that GST Returns are being prepared correctly and businesses are making GST declarations accordingly.
Proper Record Keeping
During the GST Audit, businesses may be required to submit detailed breakdown of their business transactions. It is a common procedure for RMCD to request for certain accounting information as part of the audit.
With proper record keeping in place to accurately capture and produce accounting information for GST reporting purposes, businesses are less likely to make errors in their GST declarations. This would reduce compliance costs for businesses, as any GST reporting errors would result in penalties being imposed.
Accounting Software
For businesses using manual records, the process of producing the records required by RMCD is usually time-consuming. Businesses using accounting software would find it easier to meet RMCD requests and this saves the businesses time and effort.
Accounting software should allow businesses to easily obtain the necessary information required for periodic filing of GST Returns. For example, the accounting software should be able to generate report containing all the data elements required for GST Return submission.
GST Specific Issues
In preparing for GST Audit, businesses should be aware of several common GST issues and address
them accordingly:
(a) Tax Invoice
Tax Invoice is an important document with respect to GST. If the Tax Invoice issued by the supplier does not comply with the GST legislation, the buyer will not be eligible for Input Tax Credit. Therefore, businesses must ensure their Tax Invoices complied with the GST legislation.
(b) Credit Note/Debit Note
If there are changes in quantity, amount, tax rate or cancellation of transactions, Credit Note/Debit
Note must be issued by the related parties (i.e. seller or buyer). The Credit Note/Debit Note should
comply with the GST legislation.
(c) Purchase Listing
For GST purposes, Purchase Listing includes purchases, expenses and importation of goods
regardless of whether the importation of goods is a result of a purchase. In importation of goods into Malaysia, it is important that details such as the document number of import declaration approved by
RMCD and actual GST paid to RMCD are captured in the accounting system.
(d) Supply Listing
The concept of supply in GST is different from the accounting concept of revenue. For example, the value of business goods put to private use is a deemed supply but not revenue to the businesses. The value of deemed supply and he relevant GST should be correctly included in the listing.
Conclusion
GST Audit is a relatively new experience for Malaysia, hence getting ready for it is a challenging preparation.
