A Personal Finance Blog for Malaysian: What is SELF-BILLING in GST?

Friday, April 24, 2015


The following reply from MSIG to MSIG's agent is probably a well documented FAQ about Self-Billing.

Q #1: Why is MSIG paying the GST to me? I thought they are supposed to pay to Customs on our behalf?
                        1.      A GST registered person must charge GST on their supply of goods and services and issue a Tax Invoice to                                  the recipient of this supply
·         If the agent is GST registered (i.e. a taxable person); that means that the commission he earns from his agency service to MSIG is subject to GST
·         The agent should be issuing a Tax Invoice to MSIG on all the commission that he receives from MSIG after 1st April 2015
·         Some agents do not want to be burdened with issuing the Tax Invoice for commission. They also may not know the total value of the commission that they earn, as this is dependent on when the policies are issued and when the premium fully paid
·         In such cases, Customs have allowed “Self-Billing” where the recipient (i.e. MSIG) issue the Tax Invoice on behalf of the supplier (i.e. the agent).
·         This arrangement is subject to Customs approval; and approval was granted on 9th April 2015
·         Under this “Self-Billing” agreement:
a)      The agent has given their consent to MSIG to issue the Tax Invoice on Commission on their behalf
b)      Upon approval, the agent cannot issue their own Tax Invoice
c)      Only the Self-Billed Tax Invoice issued by MSIG is recognised by Customs
·         Self-Billing is NOT about submitting the tax to Customs on behalf of another Taxable person; it is about issuing the Tax Invoice on behalf of the supplier (i.e. the agent)

2.      ALL GST-registered person (i.e. taxable person) has to account for the GST on their own taxable supply
·         Under Section 41 of the GST Act 2014, it is stated as:
Every taxable person shall, in respect of his taxable period, account for the tax in a return as may be prescribed and the return shall be furnished to the Director General in the prescribed manner not later than the last day of the month following after the end of his taxable period o which the returns relates
·         In other words, once you are GST registered (i.e. a Taxable person); you have the duty under the GST Act 2014 to submit your own GST returns on your taxable supply to Customs.
·         MSIG will be submitting the GST returns on their own supply; i.e. premium on the Insurance Services; MSIG cannot submit the returns on behalf of the agent.

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