Sales Tax
Short Writeup
Sales Tax is payable by the sellers of goods manufactured and liable to sales tax whether in bulk or piece meal. A seller must hold a Sales Tax license to be able to collect sales tax from his customer. The sales tax so collected must be paid to the Customs from time to time. These taxpayers may apply for exemption in certain circumstances.
The Sales Tax Act 1972 does not apply to goods brought into manufactured or produced in a Free Zone established under the Free Zones Act 1990.
Departments & Agencies
The Royal Customs and Excise Department
Statutes & Regulations
Sales Tax Act 1972 [Reprint – 1999]
Section 18. Duty to keep record.
(1) Every taxable person shall, in accordance with regulations made under this Act, keep full and true records written up to date of all transactions which affect or may affect his liability to sales tax.
(2) The records which are required to be kept in accordance with this section shall be preserved for a period of 6 years from the latest date to which such records relate.
Effects of non-Compliance
Penalty for late payment.
Where any amount of sales tax remains unpaid after the last day on which it was payable under section 22(2) or repayable under section 31D, as the case may be.
(a) a penalty equal to 10% of such unpaid amount shall thereupon be payable;
(b) if the sales tax due and payable remains unpaid for more than 39 days after the last day on which it was so payable or repayable the rate of penalty under paragraph (1) on such unpaid sales tax shall be increased by 10% for the second period of 30 days after such last day and for every succeeding period of 30 days or part thereof during which such amount remains unpaid to a maximum of 50%. [Section 24].
Joint and several liabilities of directors
Where any sales tax, penalty or surcharge is due and payable by-
(a) a company;
(b) a firm; or
(c) a society, an association or other body of persons,
Then notwithstanding anything to the contrary in this Act or in any other Act, the directors of such company including persons who were directors of such company, or the partners of such firms, including any persons who were partners of such firm, or the members of such society, association or other body of persons, including any persons who were together with such company, firm, society, association or other body of persons be jointly and severally liable for the sales tax penalty or surcharge:[Section 26].
Failure to comply with notice, etc.
Without prejudice to any other liability incurred under this Act, any person who –
(a) fails or refuses to comply with the requirements of section 12, or section 12A, or section 13, or section 17, or section 17A, or section 18, or section 19, or section 22, or section 28; or
(b) carries on business at any place or premises not specified in the license issued under section 13; or
(c) fails or refuses to produce any book or document for the examination or retention by the proper officer in accordance with the requirements of this Act; or
(d) fails or refuses to give correct information or refuses to give any information which he is required to give relating to sales tax; or
(e) pays a lesser amount of sales tax than is required by this Act; or
(ea) contravenes section 63A(a);
(f) in any way obstructs any proper officer in the discharge of his functions under this Act; or
(g) contrary to section 17(2), issues an invoice showing an amount which purports to be sales tax,
Shall be guilty of an offence against this Act, and such person shall be liable to imprisonment for a term not exceeding 12 months or to a fine not exceeding RM5,000 or to both. [Section 43].
Evasion of sales tax
(1) Any person who willfully with intent to evade or to assist any other person to evade sales tax -
(a) omits from a return made under this Act or any regulations made under this Act any information in relation to any matter affecting the amount of his or the other person’s chargeability to sales tax;
(b) makes any false statement or entry in any return, claim or application made under this Act or any regulations made under this Act;
(c) gives any false answer, whether verbally or in writing, to any question or request for information asked or made in pursuance of this Act or any regulations made under this Act;
(d) prepares, maintains or authorizes the preparation or maintenance of any false book of accounts, false invoices or other false records, or falsifies or authorizes the falsification of any book of accounts, invoices or records; or
(e) makes use or authorizes the use of any fraud, art or contrivance,
shall be guilty of an offence against this Act and such person shall be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding 3 years or to both. [Section 43A).
Offences by corporate bodies
(1) Where an offence against this Act or any regulation made thereunder has been committed by a company, a firm, a society, an association or other body of persons, any person who at the time of the commission of the offence was a director, manager, secretary or other similar officer or a partner of the company, firm, society, association or other body of persons or was purporting to act in such capacity shall be deemed to be guilty of that offence unless he proves that the offence was committed without his consent or connivance and that he exercised all such diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances.
(2) Where any person would be liable under this Act to any punishment, penalty or forfeiture for any act, omission, neglect or default he shall be liable to the same punishment, penalty or forfeiture for every such act, omission, neglect or default of any clerk, servant or agent, or of the clerk or servant of such agent provided that such act, employment or by such agent when acting on behalf of such person or by the clerk or servant of such agent when acting in the course of his employment in such circumstances that had such act, omission, neglect or default been committed by the agent his principal would have been liable under this section. [Section 45].
License & Permits & Forms
Section 13. Application for license, issue, etc.
(1) Every person who manufactures taxable goods in the course of business shall apply to the senior officer of sales tax in the prescribed form to be licensed as a licensed manufacturer, and subject to section 14, no person shall manufacture taxable goods in the course of business unless such person is in possession of a license issued under subsection (3).
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