Section A : General Information on GST 1. What is a GST? A Goods and Services Tax (GST) is a consumption tax based on the value-added concept. GST is charged on any taxable supply of goods and services made in the course or furtherance of any business by a taxable person in Malaysia. GST is also charged and levied on the importation of goods and services into Malaysia. 2. What is the rate of GST that will be imposed? 6% 3. Are all goods and services subject to GST? Not all goods and services will be subjected to GST. Certain basic food and amenities are free from tax, i.e. zero rated. In addition, certain supply of goods and services such as financial services and healthcare services are determined by the Government as exempt supply. For more information, please refer to the following: i) Goods and Services Tax (Zero-rated Supply) Order 2014 http://gst.customs.gov.my/en/rg/siteassets/gst_order/pua_20141013_p.u.%2 0(A)%20272%20- %20Perintah%20CBP%20(Pembekalan%20Berkadar%20Sifar)%202014.pdf ii) Goods and Services Tax (Exempt Supply) Order 2014 http://gst.customs.gov.my/en/rg/siteassets/gst_order/pua_20141013_p.u.%2 0(A)%20271- perintah%20cukai%20barang%20dan%20perkhidmatan%20(pembekalan%2 0dikecualikan)%202014.pdf 4. Do all businesses need to be registered under GST? Any person who makes a taxable supply for business purposes and the taxable turnover of that supply for a period of 12 months or less exceeds the threshold of RM500,000 is required to be registered for GST. However, business with taxable turnover of RM500,000 and below may choose to apply for voluntary registration. For further enquiries, kindly refer to this official GST website : http://gst.customs.gov.my/en/cu/pages/cu_ccc.aspx FAQs for GST-Version 6.0 March 2015 Page 1
5. How does GST work? In Malaysia, a person who is registered under the Goods and Services Tax Act 2014 is known as a registered person. A registered person is required to charge GST (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 (input tax) 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. 6. Where can I obtain more information about the GST mechanism in Malaysia? Please refer to the official website of the Royal Malaysian Customs Department (RMCD) at http://gst.customs.gov.my/ for more GST-related information, legislation and guidelines. FAQs for GST-Version 6.0 March 2015 Page 2
Section B : GST information about Bursa Malaysia ( Bursa ) 1. Is Bursa a GST registered person? Yes, Bursa and its subsidiaries are registered as prescribed under the GST with requirements of RMCD. The following are the respective registration numbers: No. Name of Company Registration Number 1 Bursa Malaysia Berhad 001799364608 2 Bursa Malaysia Securities Berhad 000830267392 3 Bursa Malaysia Securities Clearing Sdn Bhd 002002501632 4 Bursa Malaysia Derivatives Berhad 001064173568 Bursa Malaysia Derivatives Clearing 5 Berhad 001446649856 6 Bursa Malaysia Depository Sdn Bhd 001730162688 7 Bursa Malaysia Information Sdn Bhd 001159364608 8 Bursa Malaysia Islamic Services Sdn Bhd 001165811712 2. What are the GST treatments of fees charged by the Bursa Group? With effect from 1 April 2015, Bursa will charge GST at the standard rate of 6% (where applicable), as governed by the GST Act 2014. The schedule of fees charged by the Bursa Group includes, but not limited to, the following: Bursa Group Securities Market (All fees are standard rated, that is 6%) Type of fees Trading fee Clearing fee ISS fee Buy-in commission Admin Fee - Failed Securities Contract Fees for Securities Borrowing & Lending Listing fee Depository services fee Information service * Participants fee Access fee Central Matching Facility fee Fees relating to Clearing Guarantee Funds FAQs for GST-Version 6.0 March 2015 Page 3
Bursa Group Derivatives Market (All fees are standard rated, that is 6%) Type of fees Trading fee Clearing fees Clearing House Services fees Membership fees Information services & Market Data* Islamic Market Bursa Suq Al-Sila' (BSAS) (All fees are standard rated, that is 6%) Trading fee Access fee Administrative fee Islamic Market Sukuk & Bonds (All fees are standard rated, that is 6%) Islamic Market Exchange Traded Sukuk & Bonds (ETBs) (All fees are standard rated, that is 6%) Listing fee Trading fee Clearing fee Listing fee Public Issue Fee Labuan International Financial Exchange (LFX) (All fees are Out of Scope, not subjected to GST) Application fee Renewal fee Listing fee Regulations (All fees are standard rated, that is 6% except for transfer fees & fines which are Out of Scope, not subjected to GST) Perusal fee Processing fee Access fee to Bursa Link Technology Systems (All fees are standard rated, that is 6%) Installation fee Network equipment rental Access fee Co-location* FAQs for GST-Version 6.0 March 2015 Page 4
Bursa Group Others (All fees are standard rated, that is 6%) Type of fees Rental Knowledge Centre - Membership fees, service fee, sale of publication and corporate souvenirs Tender fee Events Sponsorship income, participant fee and registration fee CBRS III Research coverage services *Note: If charged to a non-malaysian, it may qualify for zero rated (subject to conditions prescribed in the GST legislation). 3. Is the buying and selling of shares subjected to GST? The buying or selling of shares is an exempt supply as set out in the Second Schedule of the Goods and Services Tax (Exempt Supply) Order 2014 i.e. when a share is bought or sold there will be no GST on the gross contract amount, which is price x quantity of the securities. However, the supply of services relating to the buying and selling of shares such as clearing and settlement, brokerage etc. for which fees or commission are charged, will be subject to GST at the standard rate of 6%. 4. Are the fines imposed under the Rules of Bursa subjected to GST? No, fines imposed under the Listing Requirements and all Business Rules of Bursa Group of Companies are not within the scope of GST, as such, not subjected to GST. 5. Is late payment interest subjected to GST? No, late payment is not within the scope of GST, as such, not subjected to GST. 6. What is the treatment of interest income given back to the brokers? Interest income is exempt for the purposes of GST. FAQs for GST-Version 6.0 March 2015 Page 5
7. Will Bursa Malaysia issue tax invoices? Yes, as Bursa Group of Companies has registered with the RMCD, Bursa will issue tax invoices for its taxable supply of goods and services. 8. If I am a non-malaysian trading Bursa s products, will I be charged GST on the services rendered in Malaysia? Yes, as a non-malaysian trading on Bursa s products, you will be charged GST at the standard rate of 6%. 9. If my membership tenure in Bursa s Knowledge Centre overlaps 1 April 2015, is the said membership fee subjected to GST? GST will take effect from 1 April 2015. As such, the proportion of membership fee after 1 April 2015 is subject to GST. However, your payment made before the implementation of GST is deemed inclusive of GST. 10. Are transfer fees imposed on Participating Organisations ( POs ) for the recruitment of experienced dealers representatives from another PO subjected to GST? No, the above transfer fees are out of the scope of GST. 11. I am a non-malaysian client subscribing to Bursa's Technical Infrastructure Services (TISA - rental model) and Bursa's co-location services, why is the colocation service fee qualified for zero-rated but the TISA fee is subject to GST at standard rated? To qualify for zero-rated treatment, the relevant services must be prescribed in the GST (Zero-rated Supply) Order 2014 ( the Order ). As the co-location services relate to the provision of a physical environment for the operation of the computer server equipment in Malaysia of a computer server equipment belonging to a non- Malaysian (as per clause 19, Second Schedule of the Order), the fees are qualified for zero-rated treatment. However, TISA is not prescribed in the Order, as such, GST at standard rated will be applied. FAQs for GST-Version 6.0 March 2015 Page 6
12. What is the contractual relationship between the clearing participant and the Clearing House? Section 51 of the Capital Markets And Services Act 2007 ( CMSA ) states that where a participant in his capacity as such enters into any transaction with an approved clearing house, the participant shall be deemed to be a party to that transaction as principal. 13. Why is collateral management fee subjected to GST? GST will be applicable where there are services rendered. The collateral management fee is for services performed by the Clearing House for managing the brokers collateral funds and hence will be subject to GST. FAQs for GST-Version 6.0 March 2015 Page 7
Section C : GST Information Specific to the Derivatives Market 1. What are the fees that are subjected to GST in the derivatives market? The fees and charges below are subjected to GST: A. Trading B. Clearing C. Clearing House Services Fee FAQs for GST-Version 6.0 March 2015 Page 8
D. Membership Fees Trading Participant / Clearing Participant/ Associate Participant & Registered Representatives E. Information Services & Market Data Fees charged to foreign customers are zero-rated if they meet the conditions in the GST (zero-rated supply) Order 2014 Type Fixed Fees GST Treatment Domestic Traders GST Treatment Foreign Traders Derivatives Real Time Standard Rated Zero-rated Derivatives - Delayed Standard Rated Zero-rated Derivatives - EOD Standard Rated Zero-rated Non-display Data Usage Standard Rated Zero-rated Service Facilitators Standard Rated Zero-rated Variable Fee Derivatives Real Time Terminal Standard Rated Zero-rated FAQs for GST-Version 6.0 March 2015 Page 9
2. Are the buying and selling of bond futures (e.g.: MGS 3 years futures) or interest rate futures (e.g.: KLIBOR 3 months futures) subject to GST? The buying or selling of bond futures and interest rate futures is an exempt supply as set out in the Second Schedule of the Goods and Services Tax (Exempt Supply) Order 2014, i.e. there will be no GST on the gross contract amount of the underlying bonds or the obligation to pay interest. However, GST will be applicable on fee based services. For example, trading, clearing and clearing house services fee in relation to buying and selling of derivatives traded in Malaysia will be subject to GST at the standard rate of 6%. 3. Are gains or losses when unwinding futures position subject to GST? Gain or losses are not subjected to GST. 4. Are any of the fees zero rated? Market data provided to non-malaysian customers (See Note) Bursa s co-location services to non-malaysian customers (See Note) Note - It is not subject to GST if the non-malaysian customers meet the conditions in the GST (zero-rated supply) Order 2014. [Also refer to Section B Question 2] 5. Are non-malaysians trading in Bursa s products subjected to GST? Based on the GST (Zero rated supply) Order 2014, services rendered to non- Malaysians in relation to Bursa s products are subject to GST. [Also refer to Section B Question 2] FAQs for GST-Version 6.0 March 2015 Page 10
6. Please explain the GST invoicing and collections process. Bursa will be implementing the invoicing and collection of GST in two phases: A. Phase 1 Takes effect on 1 April, 2015 GST will be processed by Bursa Finance Department Collection and invoicing will be managed by Bursa Finance on a monthly basis save for tender value on physical delivery B. Phase 2 Tentatively 3rd quarter 2015 GST will be processed in the Derivatives Clearing & Settlement System ( DCS ) GST invoice will be made available in the DCS for viewing, printing and archiving Collection and invoicing will be managed by Bursa Malaysia Derivatives Clearing ( BMDC ) 7. Please explain the payment process on GST during phase 1? A. Trading fees, Clearing fees and Clearing House Service Fees GST will be invoiced on the first day of the following month, on a monthly basis with a credit term of 7 calendar days from the date of the invoice (before 6.30pm) For trading fees, GST to be paid into Bursa Malaysia Derivatives ( BMD ) s operations account For clearing fee and clearing house services fees, GST to be paid into BMDC s operations account FAQs for GST-Version 6.0 March 2015 Page 11
B. Tender value For physically delivered commodities, given its large value, it will be invoiced as and when the delivery takes place. The Buying Clearing Participant must self compute and pay for the GST portion on tender amount for each physically settled contract, before delivery can take place GST to be paid into BMDC s settlement account with respective settlement banks and GST amount must be separated from settlement / tender amount The Selling Clearing Participant must ensure the tax invoices are sent to Bursa Malaysia within the stipulated time stated below: All softcopy of tax invoices should be emailed to gstderivatives@bursamalaysia.com The original hardcopy of tax invoices should be forwarded to: Finance Department Bursa Malaysia Berhad Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur, Malaysia Attention: En. Mohammad Razuky The timing is as follows: Process 1 Selling Clearing Participant to issue invoice to BMDC Timeline T + 1 by 4.00 pm 2 Buying Clearing Participant to pay GST T + 2 by 8.45 am 3 Bursa Finance to issue invoice to Buying Clearing Participant 4 Clearing House to pay GST to Selling Clearing participant T + 2 by 4.00 pm T + 2 by 4.00 pm FAQs for GST-Version 6.0 March 2015 Page 12
C. For all other fees (e.g. market data), a tax invoice will be issued by Bursa Finance and the GST inclusive amount must be settled within the due date stated in the tax invoice 8. Please explain the payment process for GST for Phase 2. A. Trading fees, Clearing fees and Clearing House Service Fees GST to be paid into BMDC s settlement account with the respective settlement banks and GST amount will co-mingle with the settlement / tender amount The timing is as follows: Process Invoice available in DCS system Clearing Participant to pay GST Timeline T + 1 after 7.00 am T + 1 by 8.45 am B. Tender amount GST to be paid into BMDC s settlement account with the respective settlement banks and GST amount will co-mingle with the settlement / tender amount Selling Clearing Participant must ensure the tax invoices are sent to Bursa Malaysia within the stipulated time stated below: All softcopy of tax invoices should be emailed to gstderivatives@bursamalaysia.com The original hardcopy of tax invoices should be forwarded to: Finance Department Bursa Malaysia Berhad Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur, Malaysia Attention: En. Mohammad Razuky FAQs for GST-Version 6.0 March 2015 Page 13
The timing is as follows: Process 1 Selling Clearing Participant to issue invoice to BMDC 2 Invoice available to the Buying Clearing Participant in the DCS system Timeline T + 1 by 4.00 pm T + 1 after 7.00 am 3 Buying Clearing Participant to pay GST T + 2 by 8.45 am C. For all other fees (e.g. market data), a tax invoice will be issued by Bursa Finance and the GST inclusive amount must be settled within the due date stated in the tax invoice 9. Why is the delivery of a commodity under a physically settled contract subjected to GST? Under the Goods and Services Tax (Exempt Supply) Order 2014, transfer of ownership of futures contract or transfer of ownership of derivatives relating to commodities is exempted from GST. However, settlement of futures contracts by way of physical delivery of commodities is subject to GST at standard rated. 10.What price will Bursa Malaysia Derivatives use for GST computation for a physically settled contract? Bursa Malaysia Derivatives will use the tender price to compute the GST for transactions between the clearing house and clearing brokers (i.e. selling brokers and buying brokers.) Tender price is the settlement price on the day the tender notice is put up. The reason is to standardise the pricing applied for the clearing participants and Clearing House. However, for the transactions between the clearing brokers and their clients, GST should be computed based on the consideration agreed between both parties. FAQs for GST-Version 6.0 March 2015 Page 14
11. Can you explain the process flow of the GST on tender amount on physical contract and the parties who need to issue the tax invoice? The seller should issue a tax invoice to the Selling CP and the timing of the issuance of the tax invoice is to be agreed upon between both parties. The Buying CP should issue a tax invoice to the Buyer and the timing of the issuance of the tax invoice is to be agreed upon between both parties. FAQs for GST-Version 6.0 March 2015 Page 15
12. Please explain the tax invoicing process for Phase I and 2 of Bursa s implementation of invoicing and collection of GST? In Phase 1, the tax invoice will be issued by Bursa Finance on a monthly basis at the beginning of the following month. The tax invoice will reflect the monthly fees by type of fees, rebates and total GST amount payable, amongst others. In Phase 2, the DCS system will be automated to allow daily invoicing. 13. How will brokers reconcile the daily and monthly settlement in the DCS? In Phase 1, prior to the enhancement of DCS, the monthly GST billed to brokers will tie to the aggregate amount of the daily GST. In Phase 2, the calculation of GST will be automated on a transactional and daily basis. The daily statements can be reconciled to the brokers daily transactions. 14. Are initial and variation margins subjected to GST? Initial and variation margins are not supply of services by Bursa and hence these are not subjected to GST. 15. What is the treatment for give up and take up trades? For commission on give up and take up transactions, BMDC will only facilitate the commission if it is configured in the DCS. GST, if applicable, will be settled between the two parties on their own. For all other fees related to the transaction, i.e. exchange and clearing fees, BMD/ BMDC will continue to charge and issue the tax invoice to the take-up broker. FAQs for GST-Version 6.0 March 2015 Page 16
16. Is option premium subjected to GST? No, option premium is not subjected to GST 17. Where is the GST obligation spelt out? Consequential to the implementation of the Goods and Services Tax Act 2014, BMD Rules and BMDC Rules will be amended to impose an obligation on relevant participants to pay GST. The non payment of GST would result in action being taken against the relevant participants under the relevant set of rules FAQs for GST-Version 6.0 March 2015 Page 17
Section D : GST Information Specific to Bursa Malaysia Islamic Services ( BMIS ) 1. Are there any changes to the monthly invoice issued by BMIS to the Commodity Trading Participants ( CTPs )? BMIS will issue monthly tax invoice effective 1 April 2015 to comply with the GST legislation. The tax invoice is similar to the current Invoice with additional information such as the GST registration number of BMIS, GST amount and amount payable after GST. An illustration example of except of the BMIS monthly tax invoice is shown in the table below: Example: BMIS Monthly tax Invoice No Description Amount (RM) 1 Trading Fee 10,000.00 2 Access Fee 1,000.00 Total Sales 11,000.00 Add GST 6% 660.00 Total Payable (Inclusive of GST Amount) 11,660.00 2. Will BMIS issue a tax invoice to a CTP who is not a GST registered person? Yes. For billing in foreign exchange currency, the tax invoice will also disclose the Ringgit Malaysia equivalent for the total amount before GST, GST amount and total amount after GST. 3. For Access and Admin Fees, are these also subjected to GST? Yes. For avoidance of doubt, please take note that any replacement of lost or damaged token(s) would also be subjected to GST at the standard rate of 6%. 4. What is the GST treatment of supply made by the Commodity Supplying Participant ( CSP ) on BSAS? The supply of commodity by the CSP on BSAS is treated as Non-Supply (Source: Page 7 of Guide on Islamic Banking issued by the RMCD: Non Supply) FAQs for GST-Version 6.0 March 2015 Page 18