Malaysia SST exemption automation
Malaysia's government abolished the GST Act, and from September 2018, the new Sales & Service Tax (SST) regulation is in force. In line with the new regulation requirements, organizations need to submit (quarterly) returns. Recently, MySST introduced new tax reporting requirements for the submitting the 'sales tax exemption' report (Schedule C) for all the raw pack items used in the manufacturing process for which organizations claim tax exemptions.
The government prescribed it in a specific format listing down the inventory flow of such items starting from Name of Supplier, Opening stock (Qty & Value), Local purchase, Imported purchase, Used in Mfg, Sold/Others, and finally the closing stock. To comply with these tax rules, company's often implemented a time-consuming manual process. Not meeting the requirements could result in substantial tax penalties.
KGT developed a fully automated SAP add-on solution to manage these 'sales tax exemption' between the various stakeholders. The SAP add-on arranges that whenever any new product comes in, the warehouse personnel notify the business to get the exempt certificate. Upon receiving the notification, business users check whether the certificate is applicable or not. When appropriate, relevant data is collected, and information is filed in the MySST portal to get the exempt certificate. If the warehouse users do not notify, it becomes a tiresome process for the business to get the exempt certificate, and the tax authorities could levy substantial tax penalties. That is what the SAP add-on avoids.
The SAP add-on facilitates the process of viewing and assessing the certificate details effectively. The user can add, via a straightforward process, new certification details. The warehouse personnel does no longer need to send the details of the 'goods receipt'. If the certificate details are not maintained, the add-on will automatically notify the business. The timely involvement avoids substantial tax penalties.
Besides the above the following benefits apply:
- A proper hierarchy to which the notifications will be sent during various stages of the Purchasing process
- Facilitates the process of inclusion of K1 number in the Importation
- Business does not need to make the MySST report manually now, thus reducing manual intervention
- Release Strategy workflow for contract
- Configuration table for storing C1 and C3 certificate information
- User Exit/BADI for storing K1 Document number in MIGO transaction
- User Exit/BADI for storing K1 Document number in MIRO transaction
- E-mail notification if the exemption certificate is not available for vendor/material combination
- Validation report for C1 and C3 Report
- Quantity check functionality with tolerance limit (Keep the function and will be activated by a user based on the future requirement from SST)
- C1 and C3 Report Generation for Custom office-based on material movement data