A Malaysian business that procures a service from a supplier that is based overseas is liable and must account for the output GST on that service if consumed locally. Imported services include (but not limited to) intellectual property, software licenses, consultancy services and acquisition of intangible rights from a supplier that is located overseas.
This output tax must be accounted for at the earlier of (i) when payment is made or (ii) date of invoice.
If the recipient of the imported service is a GST registered business, the amount of output tax incurred on the imported service can be claimed as input tax credit in respect of the imported service, during the taxable period in which the Malaysian business holds evidence of payment to the overseas supplier OR an invoice from the overseas supplier.
If the recipient of the imported service is not a GST registered business, it will need to account for the GST on imported service and not be entitled to claim input tax credit on that GST.
If the imported service was procured for non-business activity, the recipient is not liable to GST on the supply of imported services received.
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