GST Guide on Professional fee

The Royal Malaysian Customs Department (RMCD) has released a new GST Guide on Professional fee.

This industry guide is prepared to assist businesses in understanding matters with regards to GST treatment on the professional services in Malaysia.

The guide stated disbursement are not subject to GST and it does not constitute a supply provide satisfy the following conditions:-

(a) You acted for your client when paying the third party.
(b) The client actually received and used the goods or services provided by the third party.
(c) The client knows that the goods or services would be provided by the third party.
(d) The client authorized you to make payment on his behalf.
(e) The client was responsible for paying the third party.
(f) The payment is separately itemized when invoicing the client.
(g) You recover only the exact amount which you paid to the third party.
(h) The goods and services paid for are clearly additional to the supplies which you make to the client.

Any payments made on behalf of the client which satisfy the above conditions can be regarded as disbursements for GST purposes and such payment may include-

(a) non-taxable disbursements including exempt and out of scope supplies and supplies by non-taxable person.
(b) taxable disbursements.
(c) statutory fees such as seeking and obtaining statutory approvals from proper authorities.

Source : RMCD