Indirect Tax Alert
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Issue No. 39/2024 | 21 November 2024
Finance Bill 2024 and Measures for the Collection, Administration and Enforcement of Tax Bill 2024
The following two bills were tabled for first reading in the Dewan Rakyat on 19 November 2024:
- Finance Bill 2024
- Measures for the Collection, Administration and Enforcement of Tax Bill 2024
There is no indirect tax implication from any of the clauses in the Finance Bill 2024.
We append below the indirect tax implications from Measures for the Collection, Administration and Enforcement of Tax Bill 2024 together with our comments for your attention.
1. Use of electronic service under the Windfall Profit Levy Act 1998
A new section 27A is proposed to be inserted into the Windfall Profit Levy Act 1998 to allow the Director General of Customs (“DGC”) to provide electronic services. The electronic services will enable any registered users to file or furnish any application, return, declaration or any other document to the DGC and allow DGC to serve any notice, direction, order, permit, receipt or any other documents to the registered users.
PwC Comment
The insertion of the new section on ‘Use of electronic service’ would help the Royal Malaysian Customs Department to improve the efficiency of receiving the returns on Windfall Profit Levy.
2. Deadline for submission of return by taxable person who has varied his taxable period
Currently, any taxable persons for sales tax or service tax who have obtained approval from DGC to vary their taxable periods must furnish their returns latest by 30 days from the end of their varied taxable periods. It is proposed that the deadline for these taxable persons to furnish their returns be amended to the last day of the month following the end of their varied taxable periods.
PwC Comment
The deadline for furnishing the return will be longer than 30 days for persons with varied taxable periods. The change is also to be in line with the normal submission which is by the end of the month.
3. Power of DGC to require any person to account for sales tax on taxable goods
Currently, if any taxable persons have obtained control of any taxable goods or has imported any taxable goods, DGC is empowered to require them to account for the taxable goods. If the taxable persons fail to account for the taxable goods by reason that the goods have been sold, exported, lost or destroyed, DGC has the power to assess the amount of sales tax on those goods based on DGC’s best judgment. It is proposed that the power of DGC be expanded to allow DGC to require any persons who have obtained control of any taxable goods to to account for the taxable goods. Similarly, if the persons fail to account for the taxable goods by reason that the goods have been sold, exported, lost or destroyed, DGC has the power to assess the amount of sales tax on those goods based on DGC’s best judgment.
PwC Comment
DGC will be able to act on any persons who fail to account for any taxable goods when required by DGC. Now with the powers of DGC to go beyond the taxable persons, this may result in innocent buyers ending up losing their goods or paying the tax underpaid by another person. In this regard, when a business buys taxable goods it should do some kind of due diligence to ensure there is no underpaid sales tax on the goods.
4. Taxable period of registered seller of low value goods (LVG)
Currently, the Schedule to the Sales Tax Act 2018 in relation to section 25 has prescribed the second and subsequent taxable periods of a registered seller of LVG to be a period of two months. It is proposed that the second and subsequent taxable periods of a registered seller of LVG be amended to be a period of three months.
PwC Comment
Currently, the law on the taxable period of a registered seller of LVG is not aligned with the practice by RMCD. Those registered sellers of LVG have been informed and have been filing their LVG returns on a quarterly basis. With the proposed amendment, the law will be updated to match the current practice, per the intention of the lawmakers.
If you think your business may be affected by the above proposed amendments or if you need any clarification or assistance, please do not hesitate to contact us and we would be happy to assist you.
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