Thursday, 16 March 2017

GST Audit Frameworks and ‘Devices’ - The RMCD pushes on

The Malaysia GST environment continues to evolve, as the Royal Malaysian Customs Department (RMCD) pushes on in refining its rules, processes and policies. Budget 2017 saw various amendments to tighten up the GST Framework, dealing with such matters as the GST treatment with regards to free zones, the recovery of tax from persons leaving Malaysia, an increase in the penalty rate for unpaid taxes, and a change in definition on the time of supply for imported services.

Outside of Budget 2017, one of the more significant developments in the past year has been the GST Audit Framework document published June last year by the RMCD. GST audits has been a hot topic amongst accountants and tax agents of late, especially with the RMCD identifying 50,000 companies that will be subject to the first phase of GST audits.

The GST Audit Framework document discusses GST audits in detail, laying out key information such as the full process of the audit, documents required, and the rights and responsibilities of the auditee.

Wednesday, 8 March 2017

Will GST rates increase in Singapore?

The Singapore Budget 2017 debates continue to rumble on in Parliament, and should finish this Friday. There were many valid points raised and the discussion has been lively, and not without controversy.

For instance, one of yesterday's debates seemed to picture the Government indulging in evasive tactics when questioned about a possible GST hike in the near future. Low Thia Khiang, leader of the Workers' Party, voiced concern as to how would all the planned expenditure for healthcare and infrastructure in the coming years be funded.

Lawrence Wong, the second Minister for Finance, chose his words carefully in his response, and, while insisting that the Government is exploring all possible options, did not flat out dismiss the possibility of a GST rate increase.

Monday, 27 February 2017

Malaysia Master Tax Guide 2017 launched!

Any tax professional in the Malaysia tax scene will tell you that the Wolters Kluwer Malaysia Master Tax Guide is a must-have reference to deal with the ever-changing tax landscape. Well, the latest edition of our flagship product is now available for purchase!


Updated for all law changes up till 1 February 2017, this publication contains practical guidance on every aspect of the Malaysian tax regime that you need to know about.

Insights into the GST Appeal Process

This article was written by Datuk D P Naban and S Saravana Kumar.

This article was first published in the July 2015 issue of Tax Guardian, a publication of the Chartered Tax Institute of Malaysia and LHAG’s May 2016 issue of Legal Herald.
The much-anticipated goods and services tax (“GST”) replaced Malaysia’s sales and service tax in April this year. Under the new regime, all goods and services supplied in the country (unless they are zero-rated, exempt supply or out of scope) are subject to GST at the rate of 6% at every stage of the supply chain. Although GST is conceptually a simple consumption tax, confusion and uncertainty arising from the existing legislation (especially the wide zero-rated and exempt supply list) have made it a fairly complex tax in Malaysia.[1]

This is coupled with technical issues that will arise due to differing standpoints adopted by the Royal Malaysian Customs Department (“Customs Department”) and GST practitioners. The Goods and Services Tax Act 2014[2] (“the GST Act”) also contains a comprehensive penalty regime which, from its drafting and intent, may be read to be punitive in nature. During its roadshows nationwide, the Customs Department appeared to have assured businesses and GST practitioners that it would adopt an educational approach, at least in the first year of GST implementation, and, as such, the penalty provisions under the GST Act would be applied sparingly. This assurance is not legally binding and, in any event, the Customs Department is not estopped from applying the full strength of the law if it wishes to impose a penalty.[3]

This article will cover two major avenues of appeal available to taxpayers: the GST Appeal Tribunal and the judicial review application.

Thursday, 23 February 2017

Decoding the Law on Fixed-Term Contracts

-----This article was written by Amardeep Singh Toor, Associate with the Employment Practice Group (Lee Hishammuddin Allen & Gledhill)-----

Security of tenure

An employee in Malaysia has security of tenure. He cannot be dismissed without just cause or excuse. If he considers himself to have been so dismissed, he has a statutory right to make representations in writing to the Director General of Industrial Relations to be reinstated. The Director General will then take such steps as he may consider necessary or expedient for an expeditious settlement. Where the Director General is satisfied that there is no likelihood of the representations being settled, he will notify the Minister, who may, if he thinks fit, refer the representations to the Industrial Court for an award.1 The employer may find himself liable to substantial monetary compensation should the Industrial Court find in favour of the employee.

The principle of security of tenure guarantees an employee’s legitimate expectation to continue in his employment and to earn his livelihood unless his employer has just cause or excuse to terminate his services.2  The right to be engaged in gainful employment is a proprietary right which may not be forfeited unless there is just cause or excuse.3

The only exception to the principle of security of tenure is an employee engaged on a fixed-term contract. An employee engaged on a fixed-term contract enjoys security of tenure only for the duration stipulated in his employment contract. A fixed-term contract of service, unless a termination occurs earlier, ceases upon the expiry of the agreed term. There is a possibility of an employer evading the statutory guarantee of security of tenure by using a series of fixed-term contracts.4

An employer has the flexibility to arrange his contractual employment relationships in the best interests of his business including structuring contracts for the employment of their personnel on fixed terms where the need for an employee’s services is for a certain fixed duration. This, however, would need to be balanced against an employee’s right to security of tenure.5

The task of the Industrial Court is, therefore:

Tuesday, 21 February 2017

Singapore Budget 2017 Highlights!

Mr Heng Swee Keat presented the 2017 Budget on 20 February 2017. Overall, the main message and objective of his delivered content is to ensure Singapore remains relevant and adaptable amidst the constantly changing global business environment.

Amongst the highlights of the 2017 Budget announcement were:

Tuesday, 7 February 2017

India's 2017-2018 Budget in a flash

Arun Jaitley, India's Finance Minister, presented the country's Budget 2017 on 1 February 2017.

The Budget proposes to halve the existing personal income tax rate of 10% for taxpayers earning an annual income between INR250,000 and INR500,000. A new surcharge of 10% of tax payable is proposed on individuals whose annual taxable income is between INR5m and INR10m, while the current surcharge of 15% of tax payable is retained for those earning more than INR10m.

A simple one-page income tax return for individuals with taxable income (other than business income) of up to INR500,000 has been proposed to be introduced.

The Budget also reduces the income tax rate for smaller companies with an annual turnover of up to INR500m to 25%.

A range of proposals in the area of international tax law, including new rules on secondary transfer pricing adjustments, new interest deductibility rules to implement the recommendations contained in Action 4 of the base erosion and profit shifting project, and other changes to domestic transfer pricing provisions were also included.  

The Budget also proposes to exempt Category I and II foreign portfolio investors from indirect transfer provisions and deletes the requirement for offshore funds to maintain a minimum fund size in the year in which the fund is being wound up to benefit from the special tax regime for offshore funds.

Detailed changes were not proposed for the current indirect tax regime as there are plans for a new goods and services tax regime to replace the existing one, tentatively in July 2017.