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MINISTRY OF DOMESTIC TRADE,CO-OPERATIVES AND CONSUMERISM

GST SEMINAR8 July 2014

PWTC, Kuala Lumpur

Consumers are urged to make rational choices,spend prudently and report unethical traders tothe authorities. In this regard, the Ministry ofDomestic Trade, Cooperatives andConsumerism will intensify enforcement effortsthrough the Price Control and Anti-Profiteering Act 2011"

SECOND THRUST: STRENGTHENINGFISCAL MANAGEMENTGOODS AND SERVICES TAX (GST)

BUDGET 2014 SPEECH ON THE 25TH OCTOBER 2013BY YAB DATO' SRI MOHD NAJIB BIN TUN HAJI ABDUL RAZAK,

PRIME MINISTER AND MINISTER OF FINANCE

ANNOUNCE IMPLEMENTATIONOF THE GOODS AND SERVICES TAX

(GST)

ANNOUNCE MEASURES TAKEN BYTHE GOVERNMENT TO ENHANCEAND STRENGHTEN FINANCIALPOSITION AND STUDY ON

IMPLEMENTATION OF GST IS ATITS FINAL STAGE

ANNOUCEMENT OF GOODS ANDSERVICES TAX (GST) TO REPLACETHE PRESENT SALES TAX ANDSERVICE TAX (SST) EFFECTIVE

APRIL 1, 2015.

10 SEPTEMBER 2004 23 OCTOBER 2009 25 OCTOBER 2013

BUDGET 2005 BUDGET 2014BUDGET 2010

ANNOUNCEMENTS ON GSTREPLACED & REPEALEDTHE PRICE CONTROL ACT

1946 (121 ACT)

PCAPA ENFORCED ON1 APRIL 2011

ENABLE THE GOVERNMENT TODETERMINE THE PRICE OFGOODS AND CHARGE FOR

SERVICES

PROHIBITPROFITEERING

TO PROTECT CONSUMERINTEREST

TO ENSURE RAKYAT ARE NOTBURDEN BY UNDULY PRICE

INCREASE

PRICE CONTROL ANDANTI-PROFITEERING ACT 2011

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IMPLEMENTATION POLICIES

THIS ACT IS NOT INTENDED TO CONTROL PROFIT OFBUSINESSES

TO PREVENT BUSINESSES FROM MAKINGUNREASONABLY HIGH PROFIT THAT WILL AFFECTCONSUMER INTEREST

TO ENSURE BUSINESSES DO NOT TAKE ADVANTAGE OF ASITUATION TO RAISE PRICES OR CHARGES UNREASONABLY

PROVISIONS OF PRICE CONTROL ANDANTI-PROFITEERING ACT 2011

PRICE CONTROLCONTINUE TOENFORCED

PRICE CONTROLCONTINUE TOENFORCED

PRICE CONTROL FORSUGAR AND FACEMASKPRICE CONTROL FORSUGAR AND FACEMASK

PRICE CONTROLSCHEME FOR ALLMAJOR FESTIVESEASONS

PRICE CONTROLSCHEME FOR ALLMAJOR FESTIVESEASONS

PRICECONTROL

PROFITEER ISMAKING PROFIT

UNREASONABLY HIGHPROFITEER IS

MAKING PROFITUNREASONABLY HIGH

PROFITEERING IS ANOFFENCEPROFITEERING IS ANOFFENCE

REGULATIONS TOPRESCRIBE PROFITEERING

MECHANISMREGULATIONS TO

PRESCRIBE PROFITEERINGMECHANISM

ANTI -PROFITEERING

COARSE GRAIN WHITE SUGAR(RM 2.84/KG)

FINE GRAIN WHITE SUGAR(RM 2.94/KG)

1 PLY(RM7.00/BOX)

2 PLY(RM10.00/BOX@ RM0.20/PCS)

3 PLY(RM0.80/PCS)

N95(RM6.00/PCS)

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PRICE CONTROL UNDERTHE PRICE CONTROL AND ANTI-PROFITEERING ACT 2011

EFFECTIVEAUGUST 26, 2009

SUGAR

FACEMASK

EFFECTIVESEPTEMBER 13, 2006MAXIMUM RETAIL

PRICE NOWOCTOBER 26, 2013

LIVE / STANDARD / SUPER CHICKEN

CHICKEN EGG GRADE A / GRADE B / GRADE C

LOCAL BONE-IN MUTTON

LOCAL BEEF

TOMATO

RED CHILLI

GRATED COCONUT

WHITE POMFRET

INDIAN MACKEREL

TO CURB PRICE INCREASE DURINGFESTIVE PERIOD ESSENTIAL FESTIVE GOODS POTENTIAL HIKE IN PRICE DUE TO HIGHDEMAND

IMPLEMENT DURING FESTIVE SEASONS CHINESE NEW YEAR HARVEST FESTIVAL

GAWAI HARI RAYA PUASA

DEEPAVALI CHRISTMAS

FESTIVE SEASONS PRICE CONTROL SCHEME

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PRICES OF SUBSIDIZED CONTROLLED GOODSLIQUIDFIED PETROLEUM GAS (LPG) 10KG (RM19.00) 12KG (RM22.80) 14KG (RM26.60)PURE PALM COOKING OIL (P. Msia) 500G (RM1.85) 1KG (RM3.30) 2KG (RM6.25) 3KG (RM9.00) 5KG (RM13.35)BLENDED PALM COOKING OIL (P.Msia) 500G (RM2.05) 1KG (RM3.60) 2KG (RM7.20) 3KG (RM10.35) 5KG (RM14.70)

COOKING OIL @ PLASTIC BAGS(RM2.50/KG)

PETROL RON 95 (RM2.10/LITRE)

PETROL RON 97 (RM2.90/LITRE) *

DIESEL (RM2.00/LITRE)

GENERAL PURPOSE WHITE FLOUR(RM1.35/KG)

CONTROL OF SUPPLLIES ACT 1961

ADMINISTRATIVE PRICE CONTROLMANIPULATION OF SUPPLY AND

HOARDING

PROFITEERING

IMPLEMENTATIONOF GST

RATIONALISESUBSIDY

WEATHERCONDITIONS OR

NATURALDISASTER

SPECIAL EVENTS

MANIPULATIONDUE TO SUPPLYDISRUPTIONS

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WHAT SITUATIONS CAUSES PROFITEERING?

LEGISLATION & ENFORCEMENT

11 12

MDTCCTO AVOID EXPOSING CONSUMERS TOGREATER THAN NECESSARY PRICEINCREASE OF GOODS & SERVICES

DURING GST

TO AVOID EXPOSING CONSUMERS TOGREATER THAN NECESSARY PRICEINCREASE OF GOODS & SERVICES

DURING GSTENFORCE THE PRICE CONTROL AND

ANTI-PROFITEERING ACT 2011TO CURB PROFITEERING

ENFORCE THE PRICE CONTROL ANDANTI-PROFITEERING ACT 2011

TO CURB PROFITEERING

TO ENSURE THERE IS NO EXPLOITATIONOR MANIPULATION BY BUSINESSES

TO ENSURE THERE IS NO EXPLOITATIONOR MANIPULATION BY BUSINESSES

CONSUMERS TO RECEIVE THE BENEFITSOF ANY INDIRECT TAX REDUCTIONS

CONSUMERS TO RECEIVE THE BENEFITSOF ANY INDIRECT TAX REDUCTIONS

ENFORCEMENT COVERS ALL BUSINESSESENFORCEMENT COVERS ALL BUSINESSES

CUSTOMSCOLLECTS REVENUE IN THE FORM OF

CONSUMPTION TAX (GST)COLLECTS REVENUE IN THE FORM OF

CONSUMPTION TAX (GST)

ENFORCETHE GOODS AND SERVICES TAX ACT 2014

ENFORCETHE GOODS AND SERVICES TAX ACT 2014

GST REGISTRANTSUNDER THE GST ACT 2014

GST REGISTRANTSUNDER THE GST ACT 2014

MDTCC ROLE DURING IMPLEMENTATIONOF THE GOODS AND SERVICES TAX

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LEGISLATION

- PRICE CONTROLAND ANTI-

PROFITEERING ACT2011

- MECHANISM TOCONTROL

PROFITEERINGRELATED TO GST

ENFORCEMENT

ENFORCEMENT OFTHE PRICE CONTROL

AND ANTI-PROFITEERING ACT

2011

DATA BASE

DATA BASE FORPRICES OF GOODSAND CHARGESFOR SERVICE

BEFORE & AFTERIMPLEMENTATION

OF GST

ADVOCACY

- EDUCATECONSUMERS &BUSINESSES- TO CREATECONSUMERSAWARENESS- TO INSTILL

GOODBUSINESSPRACTICES

CALL CENTRE

COMPLAINTS&

INFORMATION

MDTCC STEERING COMMITTEE CHAIR ED BY THE SECRETARY GENERAL OF MDTCC MEMBERS - MDTCC, MOF AND CUSTOMS MONITOR PROGRESS UNDER RESPECTIVE SCOPE OF FUNCTION

MDTCC STEERING COMMITTEE CHAIR ED BY THE SECRETARY GENERAL OF MDTCC MEMBERS - MDTCC, MOF AND CUSTOMS MONITOR PROGRESS UNDER RESPECTIVE SCOPE OF FUNCTION

MDTCC IN PREPARATIONFOR THE IMPLEMENTATION OF GST PRICE CONTROL AND ANTI-PROFITEERING ACT 2011

OFFENCE OF PROFITEER PROFITEER MEANS MAKING PROFIT UNREASONABLY HIGH. PROFITEER IN SELLING OR OFFERING TO SELL OR SUPPLYING OR OFFERING TOSUPPLY ANY GOODS OR SERVICES COMMITS AN OFFENCE.

OFFENCE OF PROFITEER PROFITEER MEANS MAKING PROFIT UNREASONABLY HIGH. PROFITEER IN SELLING OR OFFERING TO SELL OR SUPPLYING OR OFFERING TOSUPPLY ANY GOODS OR SERVICES COMMITS AN OFFENCE.

SECTION 14(1) PCAPA 2011

MECHANISM TO DETERMINE UNREASONABLY HIGH PROFIT THE MINISTER SHALLPRESCRIBE THE MECHANISM TO DETERMINE THAT PROFIT IS UNREASONABLY HIGH.

MECHANISM TO DETERMINE UNREASONABLY HIGH PROFIT THE MINISTER SHALLPRESCRIBE THE MECHANISM TO DETERMINE THAT PROFIT IS UNREASONABLY HIGH.

SECTION 15(1) PCAPA 2011

ADMENDMENTS TO THE PRICE CONTROL AND ANTI-PROFITEERING ACT 2011 PRICE CONTROL AND ANTI-PROFITEERING (MECHANISM TO DETERMINEUNREASONABLY HIGH PROFIT) (GOODS AND SERVICES TAX) REGULATION 201_

ADMENDMENTS TO THE PRICE CONTROL AND ANTI-PROFITEERING ACT 2011 PRICE CONTROL AND ANTI-PROFITEERING (MECHANISM TO DETERMINEUNREASONABLY HIGH PROFIT) (GOODS AND SERVICES TAX) REGULATION 201_

ENFORCE THE PROFITEERING

LEGISLATION

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MECHANISM TO DETERMINEPROFITEERING

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SHALL NOT INCLUDE ANY ELEMENT OFTAXES WHICH IS ENTITLED TO BE CLAIMIN DETERMINING PRICES OF GOODS ORCHARGES FOR SERVICES

SHALL BE NO INCREASE IN THE NETPROFIT MARGIN OF ANY GOODS ANDSERVICES WITHIN THE PRESCRIBEDPERIOD

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MECHANISM TO DETERMINE PROFITEERING(GOODS AND SERVICES TAX)

PRICE CONTROL ANDANTI-PROFITEERING(MECHANISM TO

DETERMINEUNREASONABLY HIGHPROFIT) (GOODS AND

SERVICES TAX)REGULATIONS 201_

PROFITEERING

SECTION 10APCAPA

(AMENDMENT)ACT 2014

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PROHIBITS BUSINESSES TO INCLUDE THE FOLLOWING ITEMS AS PART OF THEPRICE OF THE GOODS AND CHARGES FOR THE SERVICES : ANY CREDIT FOR INPUT TAX WHICH IS CLAIMABLE AGAINST OUTPUT TAX ANY SPECIAL REFUND OF SALES TAX

SHALL NOT INCREASE THE NET PROFIT MARGIN FOR ANY GOODS ORSERVICES. THE NET PROFIT MARGIN SHALL BE IN RINGGIT

THE PERIOD IN WHICH THE NET PROFIT MARGIN SHALL NOT INCREASE SHALLBE BASED ON AN APPROPRIATE PERIOD PRESCRIBED BEFORE AND AFTER THEIMPOSITION OF GST

BASIS TO DETERMINE THE APPROPRIATE NET PROFIT MARGIN SHALL BE BASEON THE NET PROFIT MARGIN ON A PRESCRIBED DATE DURING THE PERIODPRESCRIBE BEFORE GST IS IMPOSED

IMPOSED ON ALL BUSINESSES18

MANUFACTURERWHOLESALER

PURCHASE PRICE = RM106.00(-) GST (6%) = RM 6.00

RM100.00

WHOLESALER

RM106.00

Cost + Margin = RM100GST (6%) = RM6 INPUT TAX

RETAILER

RM137.80

Cost of Goods = RM100Profit Margin = RM 30Selling Price WITHOUT GST = RM 130GST (6%) = RM7.80

CONSUMER

RM169.60

Cost of Goods = RM 130Profit Margin = RM 30Selling Price WITHOUT GST = RM 160GST (6%) = RM9.60

RETAILERPURCHASE PRICE = RM137.80(-) GST (6%) = RM 7.80

RM 130.00

INPUT TAX

SELLING PRICE

SELLING PRICE

SELLING PRICE

COST : Raw materials, utilities,telephones, furnitures,equipments, rental, etc

RM9.60GST paid byconsumer

RM9.60GST paid byconsumer

Before GSTBefore GST

Mechanism for determining whether a profit is unreasonably high has been madein the period prescribed prior to the effective date.

Formula: Net Profit Margin in Ringgit derived from calculations ofSelling Price, Cost of Goods and Operating Cost.

After GSTAfter GST

Mechanism for determining whether a profit is unreasonably high has been madein the period prescribed from the effective date

Formula: Net Profit Margin in Ringgit derived from calculations ofSelling Price, Cost of Goods, Operating Cost and Input & Output Tax(GST)

A profit isunreasonably

high

A profit isunreasonably

high

NPM in Ringgit on any date in the period prescribed prior to the effective date ofGST exceeds NPM in Ringgit on a prescribed date in the same period prescribedprior to the effective date of GST

NPM in Ringgit in the period prescribe from the effective date of GST exceeds NPMin Ringgit on a prescribed date in the period prescribed prior to the effective date ofGST

PROPOSED PRICE CONTROL AND ANTI-PROFITEERING(MECHANISM TO DETERMINE UNREASONABLY HIGH PROFIT)

(GOODS AND SERVICES TAX) REGULATIONS 201_

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1/4/2015GST

EFFECTIVE DATE(IMPOSITION

OF GST)

IMPOSTION OFNET PROFIT

MARGIN STOPS

A PRESCRIBED PERIOD DURING WHICHTHERE SHALL BE NO INCREASE IN THE NET

PROFIT MARGIN AFTER GST

SHALL BE THE NPM ON APRESCRIBED DATE IN THE PERIOD

PRESCRIBED PRIOR TO THEEFFECTIVE DATE OF GST

1/1/2015

NO INCREASE IN THE NET PROFIT MARGIN

OBLIGATION TO MAINTAIN THE NET PROFIT MARGIN IN RINGGIT APPLIES TO ALLBUSINESSES

1/7/2014GST ACT2014COMESINTO

OPERATION

DETERMINING THE NET PROFITMARGIN BEFORE GST

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ILLUSTRATIONSDETERMINATION OF

SELLING PRICEAND

NET PROFIT MARGIN

Cost of the goods RM106.00(INCLUSIVE SALES TAX)

Add : Operating Cost RM 23.40(INCLUSIVE SALES & SERVICE TAX)

Actual Cost of Goods RM129.40Add:

Selling Cost / Selling price RM139.40

Cost of the goods RM106.00(INCLUSIVE SALES TAX)

Add : Operating Cost RM 23.40(INCLUSIVE SALES & SERVICE TAX)

Actual Cost of Goods RM129.40Add:

Selling Cost / Selling price RM139.40

Cost of the goods RM106.00Less: 6% GST (Input Tax COG) (RM 6.00)

RM100.00Add : Operating Cost RM 23.40Less : 6% GST (Input Tax OC) (RM 1.30)

RM 22.10

Actual Cost of Goods RM122.10Add:Selling Cost RM132.10Add: 6% GST(Output Tax) RM 7.90

Selling price RM140.00

Cost of the goods RM106.00Less: 6% GST (Input Tax COG) (RM 6.00)

RM100.00Add : Operating Cost RM 23.40Less : 6% GST (Input Tax OC) (RM 1.30)

RM 22.10

Actual Cost of Goods RM122.10Add:Selling Cost RM132.10Add: 6% GST(Output Tax) RM 7.90

Selling price RM140.00

BEFORE GST TAXABLE PERSONAFTER IMPOSITION OF GST

Net profit margin RM10.00 Net profit margin RM10.00

1/4/2015EFFECTIVE DATE

(IMPOSITION OF GST)

NO INCREASE IN THE NET PROFIT MARGIN

(6%/106% x RM23.40)

(6%/106% x RM106.00) DEDUCT INPUT TAX

MAINTAIN NETPROFIT MARGIN

MAINTAIN NETPROFIT MARGIN

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Cost of Goods Including 6% GST RM140.00

Add : Operating Cost Including 6% GST

RM 23.40Actual Cost of Goods RM163.40Add:SELLING PRICE RM 173.40* No GST on Selling Price

Cost of the goods RM132.10(6% GST) ( Input Tax ) + RM 7.90

Operating Cost RM 22.10(6% GST) ( Input Tax ) + RM 1.30

MAINTAINNET PROFITMARGIN

OTHER THAN TAXABLE PERSONAFTER IMPOSITION OF GST

Net Profit Margin RM 10.00

MANUFACTURER

GOODS&

SERVICES

INPUT TAX CREDIT AGAINST OUTPUT TAXCLAIMABLE BY TRADERS

INPUT TAX CREDIT AGAINST OUTPUT TAXCLAIMABLE BY TRADERS

GST ATASINPUT= CUKAI INPUT

GST ATASOUTPUT= CUKAI OUTPUT

OUTPUT TAX6%

WHOLESALER RETAILER

INPUT TAX

CONSUMER

SHALL NOT INCREASETHE NET PROFIT MARGIN IN RINGGIT

SHALL NOT INCREASETHE NET PROFIT MARGIN IN RINGGIT

MECHANISM FOR PROFITEERING24

ENFORCEMENT ON PROFITEERINGDURING THE IMPLEMENTATION GST

SHALL NOT INCLUDE INPUT TAX CREDIT &SPECIAL SALES TAX REFUND IN PRICESAND CHARGES

RAW MATERIALS,RENTAL, UTILITIES,FUEL, FURNITURES,OFFICE EQUIPMENTS,

PROFFESIONALSERVICES ETC

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REGISTERED PERSONREGISTERED PERSONIMPOSE GOODS AND SERVICES TAX

INPUT TAX CLAIMABLE

PROHIBITED TO INCLUDE ANY INPUTTAX CREDIT CLAIMABLE AGAINSTOUTPUT TAX & SPECIAL SALES TAXREFUND AS PART OF PRICES AND

CHARGES

INPUT TAX IS NOT A COST TOBUSINESS

OTHER THAN REGISTEREDPERSON

OTHER THAN REGISTEREDPERSONDO NOT IMPOSE

GOODS AND SERVICES TAXGST CHARGED ON INPUTSAND NON-CLAIMABLE

GST MAY BE INCLUDED ANDACCOUNTED AS PART OF

PRICE OF GOODS OR CHARGES FORSERVICES

GST IS A COST TO BUSINESS

ENFORCEMENT ON PROFITEERING OBLIGATION OF REGISTERED PERSON AND OTHER THANREGISTERED PERSON

KEEPING AND MAINTAINING RECORD RELATING TO THE BUSINESSOPERATION

PRESERVED FOR A PERIOD OF 7 YEARS FROM THE LATEST DATETO WHICH THE RECORD RELATES

DUTY TO KEEP AND MAINTAIN RECORDS

SALES RECORDS INCLUDING RECEIPTS AND SALES BOOKS PURCHASES RECORDS INCLUDING INVOICES FROM SUPPLIERS EXPENSES RECORDS INCLUDING PAYMENT RECORDS, INVOICESAND PARTICULARS OF ACQUISITIONS

DOCUMENTS RELATING TO THE DETERMINATION OF PRICING FORTHE GOODS AND SERVICES

RECORDS OF REMUNERATIONS, ALLOWANCES OR WAGES TAX RECORDS AND RELATED DOCUMENTS

TYPES OF RECORDS

ENFORCEMENT ON RECORD KEEPING

FIRST OFFENCE FINE < RM500,000

SECOND OFFENCE FINE < RM 1,000,000

BODYCORPORATE

FIRST OFFENCE FINE < RM100,000 OR/AND < 3 YEARS IMPRISONMENT

SECOND OFFENCE FINE < RM250,000 OR/ AND < 5 YEARS IMPRISONMENT

NON - BODYCORPORATE

PENALTY FOR BREACH OFPROFITEERING

PRICE DATABASE

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CATEGORIES

GOODS &SERVICES

PARLIAMENTARYCONSTITUENCIES

COLLECTION OF DATA COVERINGA WIDE RANGE OF

GOODS AND SERVICES

BASIS & INDICATOR TOGAUGE REASONABLEPROFIT MARGINS OFGOODS AND SERVICES

REFERENCE FOR PRICEMOVEMENTS & PRICE

TRENDS OF GOODS ANDSERVICES IN THE MARKET

ENFORCEMENT / CALL CENTRE /CONSUMERS / BUSINESSES

LOCATIONSREFERRALPOINTS

DATA OF GOODS & SERVICES CATEGORIES OF GOODS AND SERVICES

80CATEGORIES

Fresh goods, Frozenfoods, Processed foods,

Cooked Foods, beverages,Subsidize/Controlled Goods,

diary products,Pre-packed foods

Apparels, household goods& furnitures, vehiclesspare parts, PersonalCare Products, Books,newspapers and Printings,Recreational & sportsequipments,ComputerEquipments,Electronics Equipments,

stationeriesHousehold services,

Health Services, health tourism,Domestic vacations,

Car services, AudiovisualEquipments, Recreations, Pets,

Transportations & logisticsservices

IMPLEMENTATION OFPRICE COLLECTIONS

PHASE I28 Aug 2014 28 Sept 2014

PHASE II6 Oct 2014 9 Nov 2014

PHASE III17 Nov 2014 21 Dec 2014

PHASE IV9 Feb 2015 15 Mac 2015

PHASE V1 Apr 2015 17 May 2015

PHASE VI25 May 2015 28 Jun 2015

PHASE VII6 Jul 2015 9 Aug 2015

PHASE VIII17 Aug 2015 20 Sept 2015

PHASE IX28 Sept 2015 11 Nov 2015

PHASE X16 Nov 2015 20 Dec 2015

2014 2015

TELEPHONE & SMS1 Malaysia One Call Centre (1MOCC) 03-80008000

Toll free Hotline : 1 800 886 800SMS to 15888 by typing KPDNKK COMPLAINT < details of the complaint>

INTERNETwebsite : http://www.kpdnkk.gov.my

e-Aduan : http://eaduan.kpdnkk.gov.myEmail : e-aduan@kpdnkk.gov.my

WALK-INMinistry of Domestic Trade, Cooperatives and Consumerism

- offices located in Putrajaya/States/Branches

HOW TO REACH US?

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THANK YOU