Legal Requirements for Taxation of Gifts in Malaysia

Updated on Wednesday 31st January 2018

In Malaysia, gifts are exempt from the goods and services tax (GST) under certain conditions. The First Schedule of the Goods and Services Tax Act provides guidance on the tax treatment of assets which are considered gifts. Our lawyers in Malaysia talk about the taxation of gifts and how this regime applies to businesses.

Conditions for the tax exemption of gifts in Malaysia

According to the tax guides released by the Malaysian tax agency, certain gifts can be exempt from the goods and services tax. Business assets may be considered gifts, and treated as such from a taxation point of view, in the following cases:
- when the acquisition cost of goods, by the donor, is lower than 500 RMN;
- when the supply if gifts tales place within one year’s time;
- the gifts are offered to the same party.
Should the proposed business assets not qualify under these criteria, then the supply is considered one of business assets (or a transfer thereof), and it is subject to the goods and services tax. Gifts which are offered in the form of samples and are not available for general public sale are not subject to GST.
One of our attorneys in Malaysia can answer any specific questions you might have about the conditions for gift GST exemption outlined above. 

The applicability of the GST in Malaysia 

The Goods and Services Tax in Malaysia is levied on the provision of goods and services and it replaced the old Sales and Services Tax. There are two rates for this tax, a 6% rate and a 0% rate for exported items, international services, basic foodstuffs, and books. Residential property, financial, healthcare, childcare and private education services are exempt from the GST in Singapore.
As far as the GST reporting requirements are concerned, companies in Malaysia need to register for GST purposes and file return only if they have an annual turnover exceeding 500,000 RMN.
The team of experts at our law firm in Malaysia can give you further explanations about the applicability of the GST and the existing exemptions. Contact us if you have any questions.