Lect 1 Indirect Taxation

Topics: Taxation, Tax, Indirect tax Pages: 154 (8524 words) Published: December 15, 2014
Advanced Taxation
Lecture 1
Indirect Taxation

2012

Dr Nakha Ratnam Somasundaram
Advanced Taxation

1

Indirect taxation

2012

Dr Nakha Ratnam Somasundaram - Advanced Taxation

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Indirect taxation
• Indirect taxes consists of the following taxes:





Sales tax
Service tax
Excise duty
Customs duty

• These taxes are collected by the Director
General of the Royal Malaysian Customs.

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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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ROYAL
MALAYSIAN
CUSTOMS:
HTTP://WWW.CUSTOMS.GOV.MY

INDIRECT TAXATION

EXCISE DUTIES

SALES TAX

CUSTOMS
DUTIES
Dr Nakha Ratnam Somasundaram - Advanced

SERVICE TAX
2012

Taxation

4

Sales Tax

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Dr Nakha Ratnam Somasundaram - Advanced
Taxation

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Sales tax
• One should understand sales tax in the
context of the following:
– Scope of charge
– Single stage charge
– Sales value
– Transactions treated as ‘sales’

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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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Overview

Sales Tax
(1)

Business
Enterprise
(Licensed
manufacturer)

Sales Tax
(2)

Director
General of
Customs

Customer
IT, RPGT

Key Points:
Imposed on consumers,



Director General
of Inland
Revenue
2012

Collected by business enterprise, and



Accountable to the Royal Malaysian
Customs and Excise


Dr Nakha Ratnam Somasundaram - Advanced
Taxation

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Scope of charge
• Section 6 of the Sales Tax Act of 1972
• Sales tax shall be charged and levied on all
taxable goods –
– manufactured in Malaysia; or
– acquired under the provisions of section 9 by a
taxable person and sold, used or disposed of by him
(otherwise than by sale or disposal, to a licensed
manufacturer authorized by the Director General to
acquire such goods without payment of tax);
– Imported into Malaysia by any person for home
consumption.
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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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Manufactured in Malaysia
• Section 2 – meaning of manufactured
– In relation to goods other than petroleum, the
conversion by manual or mechanical means
of organic or inorganic material into a new
product by changing the size, shape or nature
of such materials and includes the assembly
of parts into pieces of machinery or other
products
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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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Manufactured in Malaysia …
– Does not include the installation of machinery
or equipment for the purpose of construction ;
– In relation to petroleum, refining or
compounding and includes the addition of
any foreign substance

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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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Taxable goods
• ‘taxable goods’
– means goods of a class or kind not for the
time being exempted from sales tax.
– The goods exempted are listed out in
schedules A, B and C.

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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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• Residual definition
• If the goods are not in the list under
Schedule A, B or C of the Sales Tax
Exemption Order 1980 [P.U. (A)
365/1980], i.e. they are not in the
exempted list, then it is taxable.
• The exempted list are list of goods,
classes of persons or list of manufacturers
sorted by customs tariff code exempted
from payment of taxes.
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• Schedule A
• Goods exempted from sales tax
• Example
– Food, chemicals, plant and machinery,
jewellery etc
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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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• Schedule B
• Class of persons together with categories
of goods exempted from payment of tax
• Example
– Developing and printing photograph
– Repair second hand or used goods
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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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• Schedule C
• List of manufacturers together with
categories of goods exempted from
payment of tax

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Dr Nakha Ratnam Somasundaram - Advanced Taxation

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Goods

Goods listed in
the
exempted...
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