The Goods and Services Tax (GST) is a value added tax in Malaysia. GST is levied on most transactions in the production process, but is refunded with exception of Blocked Input Tax, to all parties in the chain of production other than the final consumer.
The existing standard rate for GST effective from 1 April 2015 is 6.0%. However, the GST rate was reset to 0% effective from June 1, 2018.
Read more about GST zero rated from June 1.
- GST refund at KLIA / klia2 airport
- Overview of Goods and Services Tax
- Overview Of Tourist Refund Scheme
- Conditions for fefund
- Goods not eligible for GST refund
- GST refund by a tourist at an approved outlet
1. Introduction
This Industry Guide is prepared to assist you in understanding the Goods and Services Tax (GST) and the related Tourist Refund Scheme (TRS). This guide will explain to you:
- As a tourist visiting Malaysia, how to claim a refund of GST paid on eligible goods purchased from an Approved Outlet
- As a business, the conditions and eligibility requirements to become an Approved Outlet
2. Overview of Goods and Services Tax (GST)
GST is a multi-stage tax on domestic consumption. GST is charged on all taxable supplies of goods and services in Malaysia except those specifically exempted. GST is also charged on the importation of goods and services into Malaysia.
Payment of GST is made in stages by the intermediaries in the production and distribution process. Although the tax is paid throughout the production and distribution chain, it is ultimately passed on to the final consumer. Therefore, the tax itself is not a cost to the intermediaries and does not appear as an expense item in their financial statements.
In Malaysia, a person who is registered under the Goods and Services Tax Act 2014 is known as a GST registered person. A GST registered person is required to charge output tax on his taxable supply of goods and services made to his customers. He is allowed to claim input tax credit on any GST incurred on his purchases which are inputs to his business. Thus, this mechanism would avoid double taxation and only the value added at each stage is taxed.
3. Overview Of Tourist Refund Scheme (TRS)
Common features and the main key players under the TRS are:
- TRS is a scheme that allows tourists to claim GST paid on eligible goods purchased in Malaysia. The tourist can then claim a GST refund from an Approved Refund Agent on the eligible goods purchased from an Approved Outlet when the tourist leaves Malaysia by air mode from one of the 8 international airports in the scope of the TRS.
- Tourists classified under the TRS are foreign tourists who are eligible to claim GST refunds and who hold a valid international passport.
- An Approved Refund Agent is an agent appointed by the Malaysian Government through tender, who processes and refunds GST refund claims made by outbound tourists.
- The Approved Refund Agent may charge an administrative fee for processing the GST refund. Any fee chargeable will be made known to the tourist when they purchase eligible goods from an Approved Outlet. The GST treatment on services of the Approved Refund Agent are zero rated because the services are considered as export services.
- The Approved Refund Agent will then recover refunds made and fee charged to tourists under TRS from the Royal Malaysian Customs Department (RMCD)
- Approved Outlets are approved retailers who are GST registered person selling standard rated goods to foreign tourists
- The Approved Outlets are retailers who are GST registered persons, approved by RMCD and selling standard rated eligible goods to foreign tourists.
- All Approved Outlets are to display TRS logos / signage at their outlets. These logos / signage will be provided by the Approved Refund Agent. When in doubt, the tourist should check with Approved Outlet whether it is participating in the TRS or otherwise.
4. Conditions For Refund of GST Under Tourist Refund Scheme
A tourist shall be entitled to the refund of GST under the TRS if s/he satisfies the following conditions:
- S/he is neither a citizen nor a permanent resident of Malaysia and holds a valid international passport.
- S/he is a foreign diplomat leaving the country after completion of service in Malaysia and is in possession of a document from the relevant diplomatic or consular mission stating that s/he is permanently leaving Malaysia.
- S/he is not nor has been employed in Malaysia at any time in the 3 months preceding the date of purchase of the eligible goods.
- S/he departs Malaysia by means of air transportation from one of the 8 international airports in the scope of the TRS.
- S/he is not a member of the cabin or flight crew of the aircraft on which s/he is departing out of Malaysia
- S/he must have purchased the eligible goods within 3 months prior to the date of departure.
- S/he must spend at least three-hundred Malaysian Ringgit (MYR300) (GST inclusive) at the same Approved Outlet. Accumulation of purchases is allowed if purchases are made from the same Approved Outlet on different days.
- S/he must take the eligible goods out of Malaysia to another country as accompanied (hand carried) or unaccompanied (checked-in) luggage.
- If s/he is entering or staying in Malaysia on a student pass, your entitlement under the TRS is like any other foreign tourist.
- S/he must be at least 18 years of age.
5. Goods Not Eligible for GST Refund under the Tourist Refund Scheme
You may claim refund on the GST charged and paid on goods purchased from an Approved Outlet, except for the following:
- Wine, spirits, beer and malt liquor
- Tobacco and tobacco products
- Precious metal and gem stones
- Goods wholly or partially consumed in Malaysia (except for clothing/tax invoices to be maintained)
- Goods which are absolutely prohibited from export under the written law
- Goods which are not taken out as accompanied (hand carried) or unaccompanied (checked-in) luggage
6. Manner/ Procedure for Claiming a GST Refund by a Tourist at an Approved Outlet
A tourist claiming a GST refund under the TRS must comply with the following requirements at the time of purchase of the eligible goods at the Approved Outlet:
- Show the tourist’s own original valid international passport to the sales assistant/cashier at the Approved Outlet to prove eligibility for a GST refund under the TRS.
- Get an original tax invoice or receipt for the eligible goods purchased.
- Get an original refund form from the sales assistant/cashier at the Approved Outlet and ensure that the refund form is completed correctly. The refund form should contain the following particulars:
- Tourist’s name
- Tourist’s passport number
- Tourist’s country of residence
- Date of arrival in Malaysia
- Intended date of departure from Malaysia
- Date of purchase of the eligible goods
- Tax invoice or receipt number for the eligible goods
- Description and quantity of the eligible goods purchased
- The total amount paid for the eligible goods, inclusive of GST, the total amount of GST refundable, the amount of the administrative/processing charge/fee and the net amount of GST refundable to the tourist.
- The tourist must indicate in the appropriate column on the original refund form on how the refund is to be made. The refund can be made:
- in cash up to three-hundred Malaysian Ringgit (MYR300);
- to a credit card account; or
- through a bank cheque if neither of the previous refund options is feasible.
- The tourist must keep the original copy of the tax invoice or receipt and the completed original refund form and produce these documents together with the purchased goods to an RMCD Customs Officer (GST Refund Verification Counter) at the airport prior to departure.
- The Tourist can only receive a refund form from the Approved Outlet where the eligible goods have been bought. A refund form cannot be issued by RMCD at the airport.
7. Manner/ Procedure for Claiming GST Refund at a Malaysian International Airport
The tourist should be ready to present the tax invoice or receipt, the completed original refund form and the eligible goods for export to an RMCD Officer for verification at the GST Customs Refund Verification Counters prior to departure from Malaysia.
The GST Customs Refund Verification Counters are located landside (before check in for unaccompanied luggage) and airside (after immigration control for accompanied luggage) at each of the 8 international airports in scope of the TRS. The tourist should also provide the RMCD Officer with:
- The Tourist’s original international passport; and
- The Tourists Boarding pass or confirmed air ticket (as proof of departure)
- The goods purchases (if jewellery in sealed plastic bag)
- The tax invoice
GST The Approved Refund Agent’s counters will be located either landside or airside, or both, at each airport. Where there is no Approved Refund Agent counter airside, a mailbox will be provided to allow the tourist to post their GST Refund Forms for processing by the Approved Refund Agent using stamped addressed envelopes provided by the Approved Outlet.
After the original refund form has been endorsed/verified by the RMCD Officer, the tourist shall not part with the goods or give them to another person, except to the counter staff for checking in.
The goods shall not be taken out of the International Airport Departure Hall after the original refund form has been endorsed by the RMCD Officer unless otherwise approved by RMCD.
The refund form that has been endorsed by the RMCD Officer shall be provided to the Approved Refund Agent either personally at the Approved Refund Agent’s counter or by post within two months from the date of RMCD endorsement. The endorsed refund form can also be put into a TRS mail box before departing. The TRS mail box shall be located airside close to the GST Customs Refund Verification Counter.
The refund must be made by the following mode of payment:
- in cash up to three-hundred Malaysian Ringgit (MYR300);
- to a credit card account; or
- through a bank cheque if neither of the previous refund options is feasible.
For flights departing from any terminal at a Malaysian International Airport, if the tourists are carrying:
- Accompanied luggage – tourists are required to present the goods and the original refund form(s) at the GST Refund Verification Counter located at the landside departure hall/lounge of all international airports in scope of the TRS. The GST Customs Refund Verification Counter for accompanied luggage shall be located airside after Immigration Control. Accompanied luggage should not weigh more than 7kg
- Unaccompanied luggage – tourists are required to declare bulky items/goods such as DVD / CD players / television sets or goods the tourists have packed into their luggage together with relevant documents (invoice/receipt/refund form/international passport)/confirmed air ticket/boarding pass at the GST Customs Refund Verification Counter before checking in the goods at the airport. The GST refund transaction must be validated by RMCD before the goods are checked in as unaccompanied luggage.
- For flights departing from the Budget Terminal (LCCT), irrespective of whether the tourist is going to carry their goods on board the aircraft (accompanied goods) or check them in (unaccompanied goods), the tourist is required to present the goods together with relevant documents and confirmed air ticket to the RMCD Officer at the GST Customs Refund Inspection Counter located landside before check in at the LCCT Terminal (unaccompanied luggage) and in the Departure Hall for hand carried (accompanied) luggage.
- Tourists who have hand carried luggage (accompanied) which do not meet the allowable airline size and weight limits are allowed to take the goods out and check in the goods as unaccompanied luggage.
- If the RMCD Officer is satisfied that all conditions for validation of the GST Refund have been met, the RMCD Officer will endorse and return the original refund form to the Tourist. The tourist may then:
- Proceed to the Approved Refund Agent’s Counter to obtain the GST refund; or
- Seal the validated original refund form in an envelope (given to the tourist at the Approved Outlet) and post it to the Approved Refund Agent to process the GST refund within 2 months of RMCD’s endorsement or drop the refund form in the mail box located near the GST Customs Verification Counter airside before departing from Malaysia by air mode. GST Refund Forms sent by ordinary post or dropped in the TRS mailbox must reach the Approved Refund Agent in time for processing before the limit of 2 months from RMCD’s endorsement has expired.
8. Conditions And Eligibility Of Approved Outlet Under Tourist Refund Scheme
In order to participate in the Tourist Refund Scheme in Malaysia, a Merchant must:-
- Be registered for GST under section 20 GST Act 2014 and hold a valid GST registration number
- Be approved by the Royal Malaysian Customs Department to participate in the scheme
- Be affiliated by the Approved Refund Agent
- Be equipped by the Approved Refund Agent with the solution to issue TRS transactions to eligible tourists
- Provide a GST Refund Form to eligible tourists who wish to claim refund of GST under Tourist Refund Scheme using the solutions provided by the Approved Refund Agent
- Account for tax on a monthly period
- Sell eligible goods
- Not sell non-taxable goods/non tax refundable goods like liquor, cigarettes, tobaccos, tobacco products, gems stone and precious metal under the scheme
- Charge GST at standard rate on taxable goods sold to foreign tourists
- Issue tax invoices which indicate the cost of the goods as well as the amount of GST charged
9. Appointment of Approved Outlet
In order to be appointed as Approved Outlets the merchant will have to undergo the following procedure:
- Merchant/Outlet- Register Outlet Details via Outlet Registration Portal
- IGB (Iris Global Blue) Outlet Registration Portal/ IGB Sales Staff- Capture Outlet Details and send to GenTax Portal For Approval. If Outlet Approved will install and activate issuing solution at outlet.
- GenTax Portal/Royal Malaysian Customs Department Officer (RMCD) –Review Outlet Details and approve or reject. Send approved/reject response to Outlet Registration Portal.
Further information regarding Outlet Registration and Approval process is available on this webpage: http://business.globalblue.com/my_en/
For registration of Outlets/Merchants to become Approved Outlet under Tourist Refund Scheme please use the following link: https://iris-globalblue.com/register-trs-outlet/
10. Mechanism For Jewellery/Article of Jewellery Under TRS
Jewellery merchants who become Approved Outlet under TRS will have to adopt the following mechanism:
- Minimum purchase of jewellery (gold, platinum, silver) of RM300 (GST inclusive) is eligible to claim refund of GST under TRS
- All Approved Outlets selling jewellery will be provided with custom approved security bag with serial number. Security bag to be provided by Federation of Goldsmiths And Jewellers Association of Malaysia (FGJAM)
- Every purchase made by tourist will be sealed in security bag with serial number together with the tax invoice clearly showing weight, quantity, density, amount and serial number of the bag before tourist leave the Approved Outlet
- Approved Outlet will charge GST to the tourist and tourist will later claim refund of GST under TRS from the Approved Refund Agent
- Tourist departing from all Malaysian Airport (Second Schedule- Regulation 81 (GST Regulations 2014) will show the security bag to RMCD at the GST Refund Verification Counter. RMCD will inspect the bag and reserved the right to open the bag for weighing and confirming the density of the jewellery
- RMCD weighs and check the density of jewellery (gold, platinum, silver) using a special kind of machinery for jewellery
- After completion of weighing and confirming the density and verification by RMCD, tourist to proceed to Approved Refund Agent to claim refund of GST under TRS
For more information, please visit http://gst.customs.gov.my/.
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