gst-malaysiaAfter more than a year of rendering GST services to clients, we came across cases where some of our clients or potential clients have paid a heavy price for taking GST lightly.

We wish to share with you some experience that may assist you in learning to avoid substantial GST penalties.

  1. A construction company issued a substantial invoice during quarter 2 of the year but only submitted the invoice for accounting purposes in quarter 3; this has resulted in substantial fines imposed by the Royal Malaysian Custom Department (RMCD). The 21 days rule stipulates that GST liability crystalize within 21 days from the earliest of 3 events – delivery of services, receipt of payment or issuance of invoice. Non-finance personnel need to be educated on the implications of their day to day actions on GST obligations of the company and we would be happy to share our thoughts via a visit to your office.


  1. A foreign owned retail company registered a Sdn Bhd in Malaysia and commence trading activities. To save cost, the management decided to use their shared services based overseas to assume the accounting duties of its subsidiary in Malaysia. Curiously, someone has registered the new Sdn Bhd with RMCD. The shared service centre was never trained for Malaysian GST accounting nor was its accounting system set up to cater for GST accounting requirements in Malaysia. After a few months of operations, the company received RMCD’s warning letter for non-filing of GST returns and a severe fine was imposed.

The fine and subsequent registration on RMCD’s list to watch could have been avoided if we were engaged to assume their accounting and GST reporting role from the onset.

Here are some of the penalty clauses in the GST Act, 2014:

Section 41(6): non-submission of GST returns would result in a fine of not exceeding RM50,000 or imprisonment term not exceeding 3 years or a combination of both

Section 88: omitting material information, understating output tax and understating input tax would result in a fine of not exceeding RM50,000 or imprisonment term not exceeding 3 years or a combination of both; as well as the amount of tax undercharged

You may obtain a copy of the Act, and read the remaining numerous offences and penalties.

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For more about GST Accounting Services in Malaysia, please visit