0002073648

SAP Note

Header Data

Symptom

The objective of this note is to share information about Preparation , Pre-requisites and configurations expected in customer systems for correctly consuming GST 03 Reporting solution by SAP delivered via note 2014530

Other Terms

Malaysia - GST, GST, GST03, Reporting , Tax- Reporting

Reason and Prerequisites

Malaysia Goods and Services Tax rollout w.e.f. from 1st April 2015. Note : 1932169.

This is a consulting note for reference only and includes additional information on GST03 solution (2014530) consumption to help the consultants implementing the GST03 solution. For Business / IT processes impacting GST scenarios , customers are requested to consult their Tax experts and IT Consulting repectively.

Solution

l GST03 Report Description:

The report RPFIMY_GST is to report all the GST (Goods & Service Tax) generated for a period of a company.

As per the new Legal Change, Malaysian Government have announced the new taxation scheme “Goods and Services Tax” (GST) to be effective from April 1st 2015 in Malaysia, replacing the existing “Sales and Services tax” (Value added Tax VAT) in Malaysia.

GST is a broad based consumption tax covering all sectors of the economy i.e. all goods and services made in Malaysia including imports except specific goods and services which are categorized under zero rated supply and exempt supply orders as determined by the Minister of Finance and published in the Gazette.

The basic fundamental of GST is its self-policing features which allow the businesses to claim their Input tax credit by way of automatic deduction in their accounting system. This eases the administrative procedures on the part of businesses and the Government. Thus, the Government’s delivery system will be further enhanced.

The reporting to the Government authorities is to be done in a PDF format.

l GST03 specific Assumptions / Pre-requisites , Customizations , Parameters

¡ Assumptions and Prerequisites:

1. Company Code master data specific to Malaysia nation must be present in the system. 2. All relevant Tax codes aligned to organization's business processes and operations impacted by GST legislation are configured

correctly in the customer system. 3. All relevant Sales & Purchase documents including GST for the above Company Code must be present in the system. 4. Company code 1st currency is either in MYR or RM. If the MYR or RM is not the 1st currency, but at 2nd or 3rd currency, a BADI

(FIMY_GST_IDENTIFY_CURRENCY ) has to be implemented. Refer SAP Note 2014530 for further details.

l Customizations Required:

Maintain the following views -

1. View: V_T007Z for creating version by country. 2. View: V_T007K_MY for Grouping Tax Base Balances for Malaysia. All GST-03 form fields where we need base amount shall be

mapped in this table, by Tax codes. The column on Transaction key can be left blank if the tax code is mapped only to one GST-03 field. If same tax code is to be mapped to more than one GST03 field, then the Transaction key has to be filled accordingly (Example of Transaction keys: MWS, VST).

3. View: V_T007L_MY for Grouping Tax Amount for Malaysia. All GST-03 form fields where we need tax amount shall be mapped in this table, by Tax codes. The column on Transaction key, can be left blank if the tax code is mapped only to one GST-03 field. If

2073648 - Malaysia GST03 - Pre- requisites , customizations & Additional Information

Version 6 Validity: 13.02.2015 - active Language English (Master)

Released On 16.02.2015 05:38:43

Release Status Released for Customer

Component XX-CSC-MY Malaysia

FI-GL-GL-F1 VAT reporting (country specific)

Priority Recommendations / Additional Info

Category Consulting

Other Components

same tax code is to be mapped to more than one GST03 field, then the Transaction key has to be filled accordingly (Example of Transaction keys: MWS, VST).

4. View: FIMY_IDTY_INDCD for Mapping Tax Code to Industry Code (5 Digit value), by company code and version.

GST03 Field no. GST03 Field No. Description Maintain at respective SAP Transaction code / Table view / GST03 parameter input value

Checkbox Amendment Informational field with indicator ‘X’ in the checkbox in pdf output if the checkbox is checked. Output results as per the taxable period’s transactions. Maintain in GST03 parameters.

1 GST No. GST03 submission if: l Individual:

Tcode: OBY6 (Company code Global Data): Field: STCEG (VAT Registration No.). Refer also SAP Note 1600017 for workaround on Non-EU countries

l Group: Tcode: OBCF (Taxes on Sales/Purchases Group) Field: UMSNR (Adv.ret.tax.no.) Group GST submission is for Group reporting. The GST03 pdf output will be an aggregate of all company codes assigned to the Tax on Sales/Purchases Group.

2 Name of Business Maintain in GST03 parameters

3 Taxable Period Maintain in GST03 parameter (field: Posting date)

4 Return and Payment Due Date Maintain in GST03 parameter

5a Total Value of Standard Rated Supply

Map the relevant tax codes to this Field in: View: V_T007K_MY

5b Total Output Tax (Inclusive of Tax Value on Bad Debt Recovered & other Adjustments)

Map the relevant tax codes to this Field in: View: V_T007L_MY Note: For Bad Debt Recovered and Other Adjustments (non-bad debts), different tax codes must be defined*. Subsequently, only Bad Debts Recovered Adjustment tax code to be further mapped under field no. 18. * [Additional Information] If there is more than one industry within same company code, different tax codes is to be defined by industries. Refer Field no. 19’s requirement, since Field 5b total has to tally to Field 19.

6a Total Value of Standard Rate and Flat Rate Acquisitions


6b Total Input Tax (Inclusive of Tax Value on Bad Debt Relief & other Adjustments)

Map the relevant tax codes to this Field in: View: V_T007L_MY Note: For Bad Debt Relief and Other Adjustments (non-bad debts), different tax codes must be defined. Subsequently, only Bad Debts Relief Adjustment tax code to be further mapped under field no. 17.

7 GST Amount Payable (Item 5b – item 6b)

Auto-Calculated field

8 GST Amount Claimable (Item 6b – Item 5b)

Auto-Calculated field

9 Do you choose to carry forward refund for GST?

Informational field with indicator ‘X’ in the checkbox in pdf output if the checkbox is checked. Not a tracking functionality. Maintain in GST03 parameters.

10 Total Value of Local Zero-Rated Supplies


11 Total Value of Export Supplies Map the relevant tax codes to this Field in: View: V_T007K_MY

12 Total Value of Exempt Supplies Map the relevant tax codes to this Field in: View: V_T007K_MY

13 Total Value of Supplies Granted GST Relief


14 Total Value of Goods Imported Under Approved trader Scheme


15 Total Value of GST Suspended under item 14

Map the relevant tax codes to this Field in: View: V_T007L_MY

16 Total Value of Capital Goods Acquired

Enter relevant Asset Transaction Type and Depreciation area at the GST03 Reporting parameter. Under ‘Further Selections’, fields Transaction type and Depreciation area. Leaving this field blank, the GST03 pdf report shall report all the Transaction types documents falling in the posting period range. The value displayed in the GST03 pdf, should tally to Standard Asset Acquisition report RAZUGA_ALV01 (Transaction code: S_ALR_87012050)

17 Total Value of Bad Debt Relief Inclusive Tax


18 Total Value of Bad Debt Recovered Inclusive Tax


19 Breakdown Value of Output tax in accordance with the Major Industries Code

Map the relevant tax codes, company code, industry code and version to this Field in: View: FIMY_IDTY_INDCD Note: Different tax codes by industries within same company code is to be

l Parameters of GST03 report: ¡ General Selections -

1. Company code (mandatory parameter) - Run for single and multiple company code. The report should run for only 1 company code. For multiple company code, ‘Taxes on sales/purchases group’ parameter should be used.

2. Document Number – Run for single and range of document numbers. Only the entered document numbers should be displayed at report output. Leaving this field blank, the report shall report all the sales & purchase docs falling in the posting period range.

3. Fiscal Year (mandatory parameter) - Run for single and range of fiscal years. The report should run accordingly. For multiple year run, the report shall produce the output in an ascending format depending on the input years.

4. Posting date (mandatory parameter) – Run for single and range values. The documents falling only in the selected date/s shall be reported.

5. Reference number – If set, shall only report the filtered docs.

¡ Further Selections – All the below parameters are for further filtration. 6. Taxes on sales/purchases group – For GST Group submission, ‘Sales/Purchases Tax Group’ should be used. The report should

only work if either of ‘Company code’ or ‘Taxes on sales/purchases group’ is filled. Using this, the GST Registration Number ‘GST No.’ field 1 in PDF file should get filled with the ‘Sales/Purchases Tax Group’ registration number.

7. Fiscal period 8. Document date 9. Tax Reporting Date **

10. Tax on sales/purchases code 11. Transaction 12. Special G/L indicator 13. G/L Account 14. Transaction type 15. Depreciation area

** [Additional information on Tax Reporting Date]

a. The Tax reporting date field (for details refer note: 1232484) is available as further selection criteria provided this field “Tax Reporting Date Active” [Field name: XVATDATE] is activated at the Company Code Global Data at Transaction code OBY6.

b. In Standard SAP design, the Financial document’s tax reporting date will be auto-defaulted based on the posting date. If the tax reporting date is to be different from the posting date, then it can be manually change in the FI document, or User-Exit (enhancement SDVFX008, User Exit: EXIT_SAPLV60B_008, via Customer Modification / tr. CMOD) can be implemented based on customer specific business practice.

l Output List – Selecting the following options [checkboxes] shall arrange the ALV data accordingly at output.

1. Output Tax: Line Items 2. Output tax: Totals list 3. Input Tax: Line Items 4. Input tax: Totals list 5. Tax difference: Line Items 6. Balance per company code 7. Balance of all company codes

l Additional information

1. GST Registration Numbers :

¡ GST registration no. for reporting organization (as mentioned in SAP Note 2073648) n Individual:

Transaction code: OBY6 (Company code Global Data)

Field: STCEG (VAT Registration No.). Refer also SAP Note 1600017 for workaround on Non-EU countries

n Group:

Transaction code: OBCF (Taxes on Sales/Purchases Group)

Field: UMSNR (Adv.ret.tax.no.)

Group GST submission is for Group reporting. The GST03 PDF output will be an aggregate of all company codes assigned to the Tax on Sales/Purchases Group.

defined. Example: a same tax code can be used across company codes under different industries as this table is mapping of tax codes to respective company code and industry. However, if within same company code, there is more than one industry, then different tax code is to be defined.

20 Name of Authorized Person Maintain in GST03 parameters.

21 Identity card No. Maintain in GST03 parameters.

22 Passport No. Maintain in GST03 parameters.

23 Nationality Maintain in GST03 parameters.

24 Date Maintain in GST03 parameters.

¡ GST Registration no. for Customer and Vendor:

GST registration numbers for vendor and customers are not required for GST 03 reporting, hence no specific provisions are fixed. However based on existing options at customer/vendor master data, the following is suggested:

STCD1 = Tax Number 1 (field is of 16 char) => 1st Option .

STCD3 = Tax Number 3 (field is of 18 char) => 2nd Option (if Tax no. 1 not available)

STCD4 = Tax Number 4 (field is of 18 char) => 2nd Option (if Tax no. 1 not available)

Tax Number 2 is limited to 11 characters, hence can’t be used.

2. Business Registration Number

Since BRN (Business registration No.) is not required to be reported at GST03 , SAP do not have strict guideline for using particular field. At the same time , understanding the feedback that it may be required for control and records perspective , SAP suggest the following :

n For Company BRN : refer to a consulting Note 738029. n For Customer/ Vendor BRN : Search Term 2 for Vendor & Customer , in Table ADRC Field SORT2 .

3. Group Vs Individual GST03 Reporting

From control and Governance perspective , a restriction is built into GST03 program not to allow GST03 PDF generation for both individual GST registration and Group Registration. Once a registered person choose to do group GST03 submission , individual submission is not needed. However data related to individual company codes will be available at GST03 ALV output for analysis purposes.

4. GST03 Field 19 : Output Tax per Industry

¡ As per the GST03 guidelines, field 19 should display the corresponding output tax for the top 5 operated industries by the organization and the rest to be shown in others. Additionally, the total should tally with field 5B.

¡ Industry-specific reporting is based on the specific tax codes created. Hence if an organization operates in multiple industries and has GST03 reporting under one company code for all industries, it is required to have specific “Tax code sets” for individual industry and posting to be done using related tax code for the industry.

¡ Top 5 industry ranking is based on the total output tax for the individual industry.

5. GST03 Reporting in MYR

¡ As per the GST legislation, GST03 return needs to be submitted with values in MYR (Malaysian Ringgit).

¡ If your company code currency is either in MYR or RM, GST03 output will be in MYR as expected. ¡ If the MYR or RM is not used as the CCode currency, but as second or third currency, a BADI (FIMY_GST_IDENTIFY_CURRENCY)

has to be implemented. Refer to SAP Note 2014530 for further details.

6. Foreign Currency Invoices

As per RMCD guidelines :

¡ If a registered person issues a tax invoice in a foreign currency, the following items on the tax invoice must be converted into Ringgit for GST purposes:

n The total amount payable (excluding GST); n The total tax chargeable; and n The total amount payable (including GST).

¡ For foreign currency conversion, the use of the following exchange rates corresponding to the time of supply is acceptable by the RMCD:

n In the case of local transaction, the use of daily exchange rates, selling rate in accordance with paragraph 5 of the Third Schedule of the GST Act 2014) of any bank operating in Malaysia is acceptable.

n In the case of importation of goods, conversion of foreign currency should be at the exchange rates published weekly by Customs.

¡ For import case , refer SAP Note 2109487 - GST Malaysia - Exchange rate published by Malaysia Customs Authority for Import purchases. Please evaluate your process for capturing GST paid to customs before implementing this Note.

¡ For local invoices in foreign currency, the note 2109487 will be extended and released soon.

7. Employee Benefits

¡ As per Free Gift rule, output tax is to be charged when total amount of gift for a year for the same person exceeds RM 500. Output tax is to be charged on the amount more than RM 500.

¡ Company does not require to issue tax invoice to employee in case output tax is to be charged (as per Malaysia GST guide on Employee Benefit [EB]).

¡ There is no impact on income tax calculation due to output tax absorption as mentioned above. ¡ SAP released Note 2019307 - Malaysia Goods and Services Tax (GST) Wage Types providing 2 (two) model wage types

to help customers manually record: n The value of the employee benefits that may have GST impact (wage type MGS1) n The value of the GST output tax (wage type MGS2) to be recovered from employee n The wage types are mapped to corresponding cumulation classes/151 (for MGS1) and/152 (for MGS2) with

cumulation types – monthly and yearly. ¡ Additional financial entries along with the tax code need to be posted manually after the payroll postings in order to bring

this to GST03 reporting.

8. Import Services

¡ Imported Services

When there is a work or services provided by a foreign company who will not be GST registered in Malaysia, he does not charge GST; the customer (recipient) in Malaysia who receives the services for the purpose of business is required to account for GST as it is treated as a supply made by the recipient and the chargeability of and liability to pay tax on imported services by a taxable person and any person other than a taxable person. It also provides for the time of supply to be the time when payment is made by the recipient.

Reference can be made to the Act and guides below:

1. GOODS AND SERVICES TAX ACT 2014

n On Supply of imported services, page 28, paragraph 13(4)

2. Royal Malaysian Customs (RMC)’s GENERAL GUIDE (Draft as at 27 October 2013)

n On Imported Services with Reverse Charge mechanism, page 2, paragraph 6

n On Reverse Charge, page 20, paragraph 74

n On Time of Supply for Imported Services, page 27, paragraph 91(f)

3. RMC’s GUIDE ON SUPPLY (Draft as at 25 October 2013)

n On Supply of Imported Services, page 55, paragraph 62(c)

n On Time of Supply for Imported Services, page 74, paragraph 69(q)

¡ Workaround Solution

Most countries can make use of reverse charge mechanism for value added tax (VAT) or GST for services received. This means that the buyer or the recipient of services will be liable for VAT or GST instead of the seller. Reverse charge mechanism will have an effect on invoicing and periodic tax returns.

According to the Malaysia’s Goods and Services Tax Act 2014, page 28, paragraph 13 (4): Notwithstanding section 11 and for the purpose of subsection (1), the time of supply of imported services shall, to the extent covered by any payment by the recipient, be treated to have been made when the supplies are paid for.

In order to be able to account for GST on Imported services by way of reverse charge mechanism, and recognize it only during payment, deferred taxes with the function of reverse charge mechanism can be implemented in SAP.

When invoice for services is received from foreign supplier, the invoice will be posted with deferred tax code and reverse charge mechanism. This is followed by payment posted for the invoice. After payment transaction, the deferred tax transfer program can be run to transfer the deferred tax code posted into target tax code and accounts. Accounting entries posted with target tax code is then used for the advance tax return reporting.

SAP Notes

1. 1979386 - RFUMSV50: Legal Change Spain (non-deductible+period) 2. 2000583 - RFUMSV50: Composite tax code with non-deductible part 3. 2011533 - RFUMSV50: Reverse Charge tax code support 4. 2062785 - RFUMSV50: Invoice w/Reverse charge in foreign currency. Payment in local currency

Note 1: The SAP notes stated in item no. 1 to 3 are mandatory to be applied. SAP Note 2062785 is applicable if you have scenario in which payment is in local currency, and not according to invoice foreign currency.

Note 2: The workaround solution is leveraging on the SAP Notes that were developed for legal requirement of Spain and other countries.

Note 3: The workaround solution is not a country specific solution for Malaysia GST. The standard Deferred tax transfer (new) program (RFUMSV50), is a generic program available for purpose of handling deferred tax posting, not specific to any country.

Note 4: The workaround solution may not be applicable for Malaysia GST’s on Mixed Supplies, as Mixed Supplies may require some apportionment or adjustment to the Input tax. In this standard program, the target tax of Input and Output tax posting is of the same value.

¡ Guideline to GL account settings for reverse charge postings:

Deferred tax account which is used in invoice should have: Open item management - empty Tax category – empty Target tax account should have: Open item management - empty Tax category - '<' or '>' (Note: Target tax accounts will be the Input tax account and Output tax account) With such customizing settings the tax transfer document posted via FB01 will contain both deferred and target tax codes.

The above suggested settings have some difference when compared to SAP notes 1979386 & 2011533. The settings are to be adapted to the customer’s requirement and environment accordingly. Consulting may be required to advise customer accordingly. Example: depending on consulting discussion with customer on the relevancy to customer’s environment, the Deferred Tax account can also be of same GL a/c since no financial impact is expected on Deferred Tax a/c posting during the invoice posting.

9. Mixed supplies

Adjustments related to Mixed supplies and corresponding aportionments & partial exemptions need to be posted manually in the system with relevant adjustment Tax codes . Since mixed supplies / partial exemption scenarios and related business practices are found to be very customer specific and there is no single way to ascertain the standard solution behaviour for the system, there is no automated procedure in-built into the report program for the same . Hence on evaluation the relevant adjustments are recommended to be handled outside the system and corresponding postings are to be done with relevant tax codes to have it reflected in GST03 report.

10. GST03 Field 15 : GST suspended under Approved Traders Scheme (ATS)

¡ As per GST guideline, If goods are imported under the Approved Traders Scheme (ATS), GST is suspended at the time of importation but the approved person needs to declare the suspended GST and the value of import in the return for the taxable period where the importation took place.

¡ The required declaration under field 15 (Total Value of GST Suspended under item 14 *) at GST03 can be achieved by using appropriate combination of Tax code and Transaction Key having a nullifying effect to same GL account (since GST is suspended) and mapping the same in GST03 customization tables T007K_MY & T007L_MY correctly. Please consult an expert FI consultant to set this up correctly.

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Validity

References

This document refers to:

SAP Notes

This document is referenced by:

SAP Notes (5)

Software Component From Rel. To Rel. And Subsequent

SAP_APPL 600 600

602 602

603 603

604 604

605 605

606 606

616 616

SAP_FIN 617 617

700 700

2014530 Malaysia GST-03 Legal change : Report Note

1932169 Malaysia Legal Change Announcement: Goods and Services Tax (GST) Malaysia

2014530 Malaysia GST-03 Legal change : Report Note

2169152 Tax number : Malaysia GST Number

1932169 Malaysia Legal Change Announcement: Goods and Services Tax (GST) Malaysia

2114100 RPFIMY_GST : Wrong business partner name and no value in field 16 in GST-03 form

2136947 RPFIMY_GST : Wrong business partner name and no value in field 16 in GST-03 form

Documents

0002073648