Exemption From Licensing:
The Sales Tax Act 1972 provides the Minister the power to exempt certain persons and manufacturing operations from the licensing requirement. Such exemption is granted in the Sales Tax (Exemption from Licensing) Order 1972.
The Schedule A of the Sales Tax (Exemption from Licensing) Order 1972 stipulates that manufacturers with an annual sales turnover of taxable goods not exceeding RM100,000 are exempted from the requirement of applying for a sales tax licence. However, such manufacturers are required to apply for a certificate of exemption from licensing. The application must be made in the prescribed Form C.J. No.6. 2 copies of the duly completed Form C.J. No.6 affirmed by the following officials must be submitted to the Sales Tax office serving the district where the manufactures’ principal places of business are located:
- One of the Directors or an authorized person (for manufacturer being a company);
- All partners (for partnership business);
- The owner (for sole proprietorship business).
In addition, the manufacturers are required to furnish the following document:
- Administrative form;
- 2 copies of M&A, Form 24, Form 44 and Form 49 (for manufacturer being a company);
- 2 copies of Business Registration (for partnership and sole proprietorship)
- Local authority business licence;
- 2 photographs (Manager/Director/all partners/owner);
- 2 copies of location plan;
- 2 copies of manufacturing flowchart;
- 2 copies of the list of raw materials;
- 2 copies of the list of finished goods;
- Monthly sales statement;
- Invoice books/cash sales ( if sales transacted before date of application)
- 2 copies of identity cards.
The certificate of exemption from licensing is in the prescribed Form C.J. No.7 and valid for period of one year. The holder of a certificate of exemption from licensing is required to submit the application for renewal of such certificate within 14 days of the expiry of the current certificate.
When the sales value of the taxable goods manufactured during any one period of exemption has reached or is about to reach the threshold, it is the duty of the holder of the certificate of exemption from licensing to notify the senior officer of sales tax of such matter. In addition, the holder of the certificate of exemption from licensing is required to surrender the current certificate and submit an application to be licensed.
Being not a taxable person, the holder of the certificate of exemption from licensing is not required to charge sales tax on the sales of taxable goods manufactured by him. However, he is required to pay sales tax on taxable raw materials and components used in the manufacture.
Section 14 of the Sales Tax Act 1972 was amended with effect from 17 October 1997 to allow a person, who is exempted from licensing, to apply to be licensed in order to enjoy the facilities provided under the Sales Tax Act 1972. This provision is especially useful to manufacturers who manufacture taxable goods for export or are engaged in sub-contracting arrangements with licensed manufacturers.
Maintenance Of Records:
Every taxable person is required to issue invoices in respect to transaction relating to the sales of taxable goods. Such invoices shall be prepared in the national language or in English. The amount of sales tax payable is to be stated separately to the value of the taxable goods sold and be recovered by the taxable person from the purchaser.
The Sales Tax Act 1972 also makes provisions for the production of invoices by computer.
In addition, it is the duty of every taxable person to maintain full and true records of all transactions involving the sales of taxable goods. Such records or books of accounts must be maintained in Romanised Malay or in English. If records or books of accounts are kept in a language other than in Romanised Malay or in English, the senior officer of sales tax may request a translation be provided at the expense of the taxable person.
Records or books of accounts are to be preserved for a period of six years from the latest date to which such records relate. Failure to comply with such requirement constitutes an offence under section 43 of the Sales Tax Act 1972 and the offender is liable to a fine not exceeding RM5,000 or an imprisonment for a term not exceeding 12 months or to both such imprisonment and fine.
Submission Of Sales Tax Returns:
Sales tax returns are to be submitted according to taxable period which is defined as two calendar months. Such returns, in the prescribed Form JKED 3, must be delivered by a taxable person to the sales tax office within 28 days after the end of each taxable period. The taxable persons shall furnish, among others, the following particulars in the sales tax returns:
sales value of all taxable goods sold during the taxable period;
value of taxable goods disposed of otherwise than by sales;
value of all taxable goods used by him otherwise as raw materials;
the amount of sales tax payable.
Every licensed manufacturer is required to submit a sales tax returns whether or not any taxable goods are manufactured, sold, disposed of otherwise than by sales, disposed of otherwise than by use as material in manufacture and whether or not any sales tax is payable for such taxable period.
Sales tax returns may be delivered to the sales tax office personally or by post.
A taxable person who fails to submit sales tax returns within the stipulated period shall be guilty of an offence under section 43 of the Sales Tax Act 1972 and shall be liable to a fine not exceeding RM5,000 or an imprisonment for a term not exceeding 12 months or to both such imprisonment and fine.
Computation Of Tax:
In the case of locally manufactured goods, sales tax is levied on the sales value of the taxable goods. As such, it is pertinent that the determination of sales value complies with the provisions under the Sales Tax Act 1972. In this connection, the Sales Tax (Rules of Valuation) Regulations 2002 specifies the rules for the determination of sales value of locally manufactured goods. Generally, the transaction value of the taxable goods forms the basis of the sales value of such taxable goods.
With regards to taxable goods imported into Malaysia for home consumption, the sales value of the taxable goods represents the sum of the following amounts:
the customs value;
the amount of customs duty payable;
the amount of excise duty payable.
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