PARTICIPATING IN OUR GOODS & SERVICES TAX (GST) FOR INSURANCE FORUM?
GST for Malaysian will be implemented on 1st April 2014; so what do you know about GST and how it will impact policyholders, agents, brokers and insurers. Or, what you know we do not know or what we know you may not know….let us just share them over a forum.
Why not we go for forum discussion over this GST matter? If there is no good and effective forum online for GST on Insurance for us to articulate matters as well as acquiring specific information, why not have it here on Malaysia Insurance Online | Forum?
ISSUES THAT WE CAN START THE FORUM OFF
Some of the issues that I came across in the course of my work as underwriter are the following (of the cuff, which I thought were least understood
- Time of supply (TOS) – when is the best commencement date; should we set the TOS to start on the inception of the policy, at the time of hold cover or
- Exempt, Out of scope, Standard rated and Zero rated – what are these and how GST is to be imposed if policy is issued in such combination….
- Self-billing and the troublesome amendments that go with it….; you can’t just issue a tax invoice credit or debit note for any subsequent amendments on self-billing basis, which would mean any such amendments would have to be reverted to the other party that is obligated to collect the GST in the first instance.
- Premium quoted is always GST inclusive?
- Sum Insured is always inclusive of GST? Is this an auto-inclusion….?
- Central Administration Bureau (CAB) for facultative reinsurance and co-insurance – what is CAB planning to do for the members and is self-billing the way forward?
Something to start with….
I also read with interest the article about GST….where the following quote was made that sort of baffles me…. http://www.nst.com.my/node/34712
The implementation of the Goods and Services Tax (GST) in the insurance industry would benefit consumers, said Malaysian Insurance Institute (MII) chief executive officer Datuk Syed Moheeb Syed Kamarulzaman over at the ‘General Insurance Agent Convention 2014’. He said over a period of time, the claims cost is expected to go down, arrested by the GST due to the input tax credit that workshops and insurers can recover. At the end of the day GST would impact upon the overall industry statistics, moving forward.
So, what do you think? Is it true that GST would drive down claims costs? I definitely have reservations. …
Transitional GST issues aplenty
Customs has been kind enough to offer the industry a relief from GST for policies which span the pre and post GST period and are currently not subject to service tax (i.e. issued to individuals or non-business organisations) as follows:-
Motor vehicle insurance supplied before 1 April 2015 and where the cover spans 1 April 2015 and beyond, the premium charged and paid in full or in part before 1 April 2015 for that supply is not subject to GST.
Fire insurance supplied before 1 April 2015 and where the cover spans 1 April 2015 and beyond, the premium charged and paid in full or in part before 1 April 2015 for the supply is not subject to GST.
(Note: for business organisation, service tax of 6% would have been collected)
Article 183 (1) of Part XIX on the Transitional Provisions under the Goods and Services Act 2014, where it is stated that “Tax shall not be charged and levied on any supply of goods or services or importation of goods made before the effective date.” In view thereof all recoveries of pro-rated GST by member companies can only be done on or after the effective date of 1 April 2015.
This Article 183 would make things difficult for insurers during the transition period…. how to collect is the next big question.
Make your comment by writing over on our COMMENT column below, which is for this forum discussion