Recent updates on GST for weekend reading….
(1) Relief granted on transitional motor and fire PERSONAL insurance policies
a) Transitional relief to PERSONAL LINES FIRE POLICY
The General Insurance Association (PIAM) had appealed to the Ministry Of Finance (MOF) recently to review its latest decision to limit transitional relief to basic fire policy only, although the initial announcement by the Royal Malaysian Customs (“Customs”) in their Guide included all Fire policies. The MOF had taken note of the views expressed by PIAM and had agreed to reconsider its decision. The decision as of now, “We will let you know….”
To recap, such RELIEF is in respect of those policies that have the policy period spanning the implementation date, i.e. 1st April 2015 (“April Fools’ day”). If such relief is not granted then policyholders are to pay the pro-rate premium portion for the period from April Fools’ day till expiry date. If you buy a HouseHolder Insurance, only your basic premium on Fire element is relieved from GST but the other perils inherent to the main policy are chargeable —- making insurers needing to split those perils to enable GST to be charged!.
Please note…. THERE IS ACTUALLY NO SAVINGS ON GST BY RENEWING YOUR POLICY EARLY IF THE COMMENCEMENT DATE OF YOUR POLICY IS ON OR AFTER APRIL FOOLS’ DAY! UNDERSTAND?
b) Transitional relief to PERSONAL LINES MOTOR POLICY
The MOF had also advised the Association to wait for their confirmation on the relief for personal lines type Motor policies since this “promised relief” has yet to be gazetted. In the meantime, insurance companies are to refrain from notifying their policyholders of any relief or to charge the GST, pending the confirmation from Customs. It is good to refresh that premium must be paid to the insurer (“principal”) before the relief is to granted – agents are therefore be prompt with the premium remittance to their principal. The same principle applies as in a) above.
(2) Charging Service Tax after 1 April 2015 (“No more Service Tax bu GST”)
In accordance with the Director General’s Decision 01/2015, the last date to issue an invoice with Service Tax is 28 April 2015. PIAM had highlighted (to the Custom) the difficulty that insurers may face in some cases as they may not be able to issue policies incepted before 1 April 2015 and meet the cut-off date of 28 April 2015. The Association had requested for an extension of 12 months for all insurers.
The Customs was not in favour of granting an extension to the insurance industry and had requested insurance companies to meet the cut-off date. Therefore insurers have no choice —- agents and brokers are requested to submit all requested (or outstanding) information (or documentation) early and have all those affected policies incepted before 1 April 2015 issued by 28 April 2015. After which, only GST can be charged for insurance period from 1 April 2015 onwards.
(3) Single Self-Billed Tax Invoice for Reinsurance Premium and Commission
Customs has rejected the request for a single (combined) self-billed tax invoice (SBI) to be issued for reinsurance premium ceded and commission as this is not in accordance with the rules for self-billing. Obviously these are considered as separate supplies made by separate suppliers and cannot be
included in one bill —- there goes the Central Administration Bureau (CAB) strategy; so it is back to re-configurating your computer system to make that split….
Approval of those SBI todate is still not given by Customs after the rounds of interview with the insurers; not too sure why —- reference numbers from Customs are needed for individual (re)insurers to facilitate the self-billing arrangements through the CAB.
OK…. Happy GST and see all your hard works achieving desired results!