Goods and Services Tax (“GST”) is a multi-stage tax on domestic consumption. It is also known as value added tax in other countries. GST is charged on all taxable supplies of goods and services in Malaysia except those specifically exempted.
Yes, it is a consumption tax to replace the current Sales Tax and Service Tax (“SST”).
The rate of tax is fixed at 6% on the supply of goods and services or on the importation of goods as gazetted in the Goods and Services (Rate of Tax) Order 2014. However, the Minister may, by order published in the Gazette vary or amend the rate of tax fixed under section 10(2)(a) of Goods and Services Tax Act 2014 (“GST Act 2014”).
The GST (Rate of Tax) (Amendment) Order 2018 has been gazetted on 16 May 2018 to amend the GST rate. The rate of GST (i.e. 6%) is reduced to zero per cent (0%) effective from 1 June 2018. This change will remain in effect until further notice from the Ministry of Finance.
GST will be charged on supplies of goods and services made on or after 1 April 2015.
A person who is registered under the GST Act 2014, known as GST Registered Person can charge and collect GST on his taxable supply of goods and services made to his customers in the course or furtherance of business.
A GST Registered Person needs to issue valid tax invoices to charge GST on the taxable supply of goods and services. The GST registration number will be printed on the tax invoices and consumers can verify the GST registration status of the person via GST Portal of RMCD.
HLA has registered on 23 June 2014 as GST registered person and therefore will charge GST on supplies of goods and services made on or after 1 April 2015.
In general, life insurance policies are exempt supplies and therefore premiums paid are not subject to GST. However, non-life policies/riders premiums and other fees/charges for services provided by HLA are taxable supplies and therefore will attract GST.
No. Insurance policies are supplied by the insurer and not its agents. Although the agents are not GST Registered Persons, the insurer, like HLA is a GST Registered Person. Therefore, GST is chargeable regardless the GST registration status of its agents.
For policies that were purchased before 1 April 2015 where the premium is paid for the insurance coverage period that spans 1 April 2015, GST will be chargeable for the period of insurance cover provided on or after 1 April 2015 onwards.
Based on the illustration shown below, GST of RM8.02 will be charged for the period of coverage from 1 April 2015 onwards.
Exception:
GST spanning is not applicable if the insurance premium has already been charged Service Tax.
Premium paid before 1 June 2018 is subjected to 6% GST although the insurance coverage is after 1 June 2018. No GST will be refunded by Royal Malaysian Customs Department (“RMCD”). However, any premium paid on/after 1 June 2018 is subjected to 0% GST.
Full premium paid before 1 June 2018 is subjected to 6% GST although the insurance coverage has spanned across 1 June 2018. No GST will be refunded by Royal Malaysian Customs Department (“RMCD”).
6% GST is imposed on the partial premium paid if the paid amount before 1 June 2018 exceeded the premium attributable to insurance coverage before 1 June 2018. No GST will be refunded by RMCD. The remaining premium is subjected to 0% GST if is paid on/after 1 June 2018.
However, if the paid amount before 1 June 2018 is less than the premium attributable to insurance coverage before 1 June 2018, then the premium attributable to insurance coverage before 1 June 2018 is subjected to 6% GST. The remaining premium attributable to insurance coverage after 1 June 2018 is subjected to 0% GST.
The GST is pro-rated according to the insurance coverage if full premium is paid on/after 1 June 2018. Premium attributable to insurance coverage before 1 June 2018 is subjected to 6% GST while the remaining insurance coverage after 1 June 2018 is subjected to 0% GST.
No. The non-life insurance portion supplied by an insurer located in the Principal Customs Area covering risks located in Designated Area (Labuan, Langkawi and Tioman) is standard rated.
No, insurance premium remains the same but total amount payable will increase to include GST charged on insurance premium for non-life plan/rider.
It is an official billing document issued by the GST Registered Person that contains certain information such as details of registered person, details of supply, GST rate, GST payable amount, and amount payable after GST.
Insurance policies are supplied by the insurer and therefore, HLA will issue a tax invoice to policy owner for purchase of insurance policies, not its intermediaries.
No, you don’t need a tax invoice if you are not a GST registered person. When you are a GST registered person you need a tax invoice in order for you to claim input tax credit.
A person is entitled to claim input tax credit on insurance premium paid if:
- he is a GST Registered Person;
- he is making a taxable supply;
- the insurance policy is acquired in the course or furtherance of business; and
- the insurance policy acquired is input tax allowable.
General information and educational materials regarding GST is available at GST Portal at
gst.customs.gov.my/en/Pages/default.aspx
Yes. The said non-life products will subject to GST.
- Auto debit standing instruction made by the consumer with bank directly
– The consumer himself needs to advise the Bank to increase the auto debit limit to include GST on insurance premium for non-life plan/rider. - Auto debit standing instruction initiated by HLA via MyClear (MEPS) and Maybank
– HLA to instruct consumer’s Bank to increase the auto debit limit to include GST on insurance premium for non-life plan/rider. - Credit card standing instruction with HLA
– The billing amount by HLA will include GST on insurance premium for non-life plan/rider.
Yes. HLA is a GST Registered Person and will charge GST on all taxable supplies made to you unless we know you are granted a relief from paying GST.
Do contact our Customer Service Hotline at 03-7650 1288 during office hour or email to customerservice@hla.hongleong.com.my for any queries in relation to GST on HLA insurance products.
