𝐒𝐒𝐓 𝐫𝐞𝐟𝐮𝐧𝐝 𝐨𝐧 𝐛𝐚𝐝 𝐝𝐞𝐛𝐭𝐬
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𝐒𝐒𝐓 𝐫𝐞𝐟𝐮𝐧𝐝 𝐨𝐧 𝐛𝐚𝐝 𝐝𝐞𝐛𝐭𝐬
Sales & service tax have different accounting treatments. We must clearly know the accounting basis to avoid incorrect submission.
Let’s say the customer couldn’t make the payment to us, but we have submitted and paid SST on the relevant sales. Can we apply for the SST refund? Don’t worry, let us talk about the claim of SST refund for bad debts.
𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐢𝐧𝐠 𝐛𝐚𝐬𝐢𝐬 𝐨𝐧 𝐒𝐒𝐓 𝐨𝐧 𝐛𝐚𝐝 𝐝𝐞𝐛𝐭𝐬
Sales Tax - Accrual basis
Sales Tax is accounted for when the goods are sold, disposed of, or used.
Example:
Company A is a mechanical parts manufacturing company. The company issues invoices to customers on 15/09/2021. Therefore, the sales tax will be calculated based on the date of the invoice and submitted in the coming tax period.
Service Tax - Payment basis
Service Tax accounted : When receiving payment from a customer;
If the customer has not paid within 12 months, the taxpayer will have to pay the service tax to the customs on the first day after 12 months from the invoice date.
Example:
Company B is a service provided company. The company issues invoices to customers on 15/09/2021, but customers make payments on 17/12/2021. Therefore, the service tax will be calculated based on the date of payment and submitted in the coming tax period.
Company B is a service provided company. The company issues invoices to customers on 15/09/2021, but the customers have not paid for it for more than one year. Therefore, the service tax will be calculated on the first day after 12 months from the invoice date (15/09/2022) and submitted in the coming tax period.
𝐂𝐥𝐚𝐢𝐦 𝐟𝐨𝐫 𝐚 𝐫𝐞𝐟𝐮𝐧𝐝 𝐢𝐧 𝐛𝐚𝐝 𝐝𝐞𝐛𝐭𝐬
When the company is unable to recover the arrears from the customer, the company can request a tax refund for the paid sales and service tax from the customs. However, the company must fulfil the following conditions to claim this tax refund:
𝐒𝐚𝐥𝐞𝐬 𝐓𝐚𝐱
The company has written off all or part of the unrecoverable sales tax in the accounts as bad debts.
The company has taken reasonable actions to recover the sales tax from customers.
The company must apply for this sales tax refund within six years from the date the sales tax is paid.
𝐒𝐞𝐫𝐯𝐢𝐜𝐞 𝐓𝐚𝐱
The company has written off all or part of this unrecoverable service tax as bad debts in the accounts.
The company has taken reasonable actions to recover the service tax from customers.
The company has not recovered any payments related to service tax from the customers.
This unrecoverable service tax has been paid to the customs.
The company must apply for this service tax refund within six years from the date the service tax is paid.
𝐓𝐡𝐞 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝐦𝐞𝐭𝐡𝐨𝐝 𝐟𝐨𝐫 𝐜𝐥𝐚𝐢𝐦𝐢𝐧𝐠 𝐭𝐡𝐞 𝐫𝐞𝐟𝐮𝐧𝐝 𝐢𝐧 𝐛𝐚𝐝 𝐝𝐞𝐛𝐭𝐬
i£©If the company has received a part of the payment for the sales of taxable goods,
the claim can be made for the difference between the sales tax paid and the amount
calculated as below formula£º
A / B X C (A divided by B and multiplied by C)
A = Payment received from the customer
B = Total amount of the invoice including tax
C = Tax amount of the invoice
Example£º Company A is a registered company. The company has issued an invoice with RM 110,000.00, but company A only receives payment of RM 60,000.00 including tax from customers. Later, the customer declared bankruptcy, and he was unable to repay the debt. Company A has paid a 10% tax to the customs. Therefore, Company A is eligible to claim the bad debt sales tax refund from the customs based on the following calculations£º
𝐓𝐡𝐞 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐨𝐧 𝐌𝐞𝐭𝐡𝐨𝐝£º
RM 60,000.00 / RM 110,000.00 x RM 10,000.00 = RM 5,454.55
Hence, the bad debts that Company A can claim from the custom are RM4,545.45 (RM10,000.00 – RM5,454.55)
ii£©The required form for applying for the bad debt repayment is Form JKDM No.2. This form must be submitted to Cawangan Perakaunan Hasil according to zone /state /station.
𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐬 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐝 𝐟𝐨𝐫 𝐑𝐞𝐟𝐮𝐧𝐝
Copy of invoice or payment received.
SST-02 form and SST listing
Documents or records which prove that the sales tax paid by the customer has not been received.
Documents or records which prove that reasonable actions have been taken to claim taxable payments from customers.
Documents or records which prove that the unrecoverable sales of taxable goods have been written off as bad debts on the accounts.
Remarks: If you request the SST refund from the customs, but subsequently receive payment from the customer, you shall report the SST and pay it to the customs!
𝐒𝐨𝐮𝐫𝐜𝐞𝐬
For more details, please visit the official website£º
Accounting for SST
Sales and Service Tax 2018 (Sales Tax 2018 - Pg. 24 to 27, Service Tax 2018 - Pg. 32 to 34)
Form JKDM No.2
𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
Wisma 𝐊𝐓𝐏, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
Wisma 𝐓𝐇𝐊, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru
𝐊𝐓𝐏 (𝐀𝐮𝐝𝐢𝐭,𝐓𝐚𝐱, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients
Website www.ktp.com.my
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𝐓𝐇𝐊 (𝐒𝐞𝐜𝐫𝐞𝐭𝐚𝐫𝐢𝐚𝐥, 𝐀𝐜𝐜𝐨𝐮𝐧𝐭/𝐏𝐚𝐲𝐫𝐨𝐥𝐥, 𝐀𝐝𝐯𝐢𝐬𝐨𝐫𝐲)
A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsource booking, accounting and payroll services to clients
Website www.thks.com.my
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