What ‘device’?

By Aaron Bromley and Dave Ananth, Ernst & Young Tax Consultants Sdn Bhd

The GST Act 2014 will have two new sections - Sections 34A and 34B - introducing the potential application of a device to monitor sales activity. Internationally, such a device is commonly known as an ‘Electronic Fiscal Device’ (EFD). The application of such a device, for any registered person as prescribed by the Minister, comes into effect on 1 January 2017.

Section 34A of the GST Act states that a registered person may be required to provide information on supplies made and payments received by way of a prescribed device, to be installed at the taxpayer’s business premises. Presumably this will be integrated or configured with the Point of Sale (PoS) system (eg cash till).

With the installation, RMCD will have access to information on all sales made by the company and the payments received, on a "real-time" basis. The purpose would appear to be to capture transactions potentially not reported in the GST returns filed by the person (or in the case of a person not registered, but required to be so, those transactions not reported at all). Hence, RMCD is targeting undisclosed supplies and potential fraud.

It should be noted that the Director General of Customs may approve any person to install, configure and integrate this device. This means an independent contractor can be given permission to install this device into the taxpayer’s system, and may be responsible for the support and maintenance of the device. That person may also be authorised to carry out an inspection where there is cause to suspect interference, damage, destruction or manipulation of the data stored, or obstruction of the lawful use of the device.

Read more at Wolters Kluwer's Malaysia Tax and Accounting Views.