Malaysia GST Reverse charge at Payment

[katie_sap]

Hi All,

Is anyone working on GST Malaysia? I would like to know how the reverse charge can be posted at the time of vendor payment.

What does the legislation say specifically and how the balanced accounting entries be? Is there any cash flow impact?

How will SAP handle this?

Appreciate your valuable ideas/inputs.

Regards

Viru

[former_member222801 · Accepted solution]

Hi Viru,

For Reverse Charge Mechanism - How about creating a single Input tax code say "AB" with -6% maintained in MWS account key and +6% maintained in VST account key?

When I created and posted the finance document, below is the entry as expected.

Credit vendor a/c  1000 MYR

Debit expense a/c 1000 MYR

Credit output tax a/c 60 MYR

Debit input tax a/c 60 MYR

Regards,

Vivek

[former_member195086]

GST requirement is reversed charge posting is right after the payment which value is 6% * payment amount.

I proposed to my client to add this step as closing step and build in program to monitor all posting related to oversea service. Then, the posting will only base on the payment value which can refer to original oversea invoice service.

Posting is:

Debit: Input tax

Credit: Output tax

All steps are auto populate with customizing program and user just need to monitor value and confirm before posting.

Hai

[katie_sap]

Hi Tran,

Yes that seems to be the only way but in my case i have been told that the reverse charge is ok to be posted during invoice so that was straight forward. I hope it complies with the regulations

Also how are you handling the below scenarios.

1. GST return filing - I heard there is still no clarity on this and this will be a manual process like going to the site and manually keying the GST figures in.

2. How are you handling the GST  posting for bank charges. The bank charges are subjected to GST and we are now getting an additional GST amount line for each bank charge like item in the EBS.

regards

Viru

[former_member195086]

Hello Viru,

If reverse charge posting at invoice time, you might get issue with tax payable if your client is non-deductible person. Then, your whole input is not claimable but output is payable. Meanwhile, you have to pay for whatever tax output incurred.

For your questions, my suggestion:

1. GST return filling: it is all capture in GST03. Unless you need to submit detail data (line item input/output), then you need to specify it.

2. For the bank charger, we have to pay with GST amount. My client uses bank reconciliation then need to assign default tax code (TX) and tax calculation auto indicator on document header. Then, SAP will auto calculate all the thing with GST

We also need to check carefully about the bank charger with or without GST on Bank statement. If some have, but some other not (which will be issuing different type of invoice), then the above configuration change is not suitable.

Hai

[former_member222801]

Hi All,

Can you please share your opinion on GAF reporting? Are you providing a custom solution or awaiting for SAP solution.

Thanks in advance for your inputs!

Regards,

Vivek

[cgilberg]

Hello Vivek,

I'm going for a custom development.

Best Regards,

Christoph

[former_member195086]

I have finished develop program for client. It worked fine with detail data requested by RMCD.

Key points:

- All related tax code posting has to extract into S,P or L

- Data extraction is based on the understand that can be re-built company TB

- You need to have the solid solution of storing data of customer/vendor address, name, GST registration...even for one time posting

- You need to consider to extract data from BSET and compare/check whether need to divide it into detail of purchase/sales Item or not (since same tax code will come only 1 tax line in BSET)

- Need to consider the logic to link data from accounting to Sales/Purchase to get detail line item descriptions...

Some note for you

Hai

[Former Member]

Hi,

Please implement notes

1979386

2000583

2011533

2062785

for Reverse Charge Mechanism

[Former Member]

Hello Sonal,

did you indeed achieve the expected results after implementing all these notes ?

in our deferred taxcode setup 1 target taxcode used -->2 separate accountkeys used ( ESE and ESE) with 2 separate gl accounts to achieve plus/minus RC postings -->provided FI posting + bset content looks completely ok.  In attributes taxcode in fact 3 options are provided to define target taxcodes.

after execution RFUMSV50 BIM seems to have been  created normally--> processing BIM is however failing--> in fact exactly what SAP is explaining in OSS 2011533

I was also thinking of  3 posible attribute-options  behind the deferred taxcode;

1) target taxcode or 2) tgt taxcode:output or 3) tgt taxcode:input
so far i used the 1st option, any idea whether 2nd and 3rd option could be of help to solve the RC MY issue ?

Have there been any formal comments of SAP re our GST RC at payment issue ?

Thanks for any comments,

Pieter

[Former Member]

I have the same abap runtime error after implement the sap note (1979386, 2000583, 2011533).  Total can't run program RFUMSV50. I have escalated this issue to sap so any other solution i can used to solve this reverse charge? Please advise.

[former_member222801]

Hi Viru,

I also tried one more way. To make the tax posting while making the payment- we may also try below approach.

I have enabled tax relevancy for the cash/Bank g/l and assigned the tax code for the bank g/l.

Then system automatically posted the tax line items in the above entry. The tax code config is as mentioned in my previous comment.

The points of concerns could be:

1) Manual payment has to be done by users for the documents relevant only to Imported services using f-04

2) This single tax code has to be mapped to 5a, 5b, 6a and 6b field in table V_T007L_MY and V_T007K_MY so that in GST-03 report the value will be fetched automatically.

Please to provide your comments..

Regards,

Vivek

[Former Member]

Anyone manages to get the deferred tax with reverse charge mechanism following SAP OSS notes (ie 2073648) to work?  I read the blog by @cgilberg that he is comparing his custom program to the standard program RFUMSV50 suggested by Mohd Shazaly A J.  I am wondering whether I need to give up on the standard SAP program RFUMSV50 and build my custom program to handle this legal/business requirement.

I have been following the instructions from multiple OSS notes on required GL accounts setting (2073648, 2011533, 1979386, 1528242), setup of table T007NVV (1979386) and multiple notes for program RFUMSV50 but can't get the postings to be right.  I also attended "meet the experts" web-conference on Malaysia GST and read through all the suggested notes from the conference.  I can't manage to use RFUMSV50 to post the reversal of the deferred accrual and post the taxes to input and output accounts with the right input (TX) and output (SR) tax codes.

Any suggestions and feedback are greatly appreciate!

[katie_sap]

Hi Vivek,

Thank you all for the valuable inputs but some how there is no straight solution to post reverse charge during payment. The manual way of posting as Vivek suggested is not feasible as we have high volume of transactions. I have also tried the deferred tax mechanism but this doesnt work either.

Since GST has gone live how did you guys handled this scenario?

Please share your experience

cheers

Viru

[cgilberg]

Hello Voona,

I just read your proposal today, it's a shame a didn't do that earlier, I find the approach brilliant. I'm hanging at the last step though. I created a single tax code which posts input and output tax at the same time and assigned this tax code to the G/L account which in turn is assigned to the bank account determination in FBZP. We're using a clearing account here.

When I manually post to this clearing account through FB01, the tax code is defaulted and it creates the two tax line items as expected. However, when this account is derived in the payment run, it is being posted to without the tax code and consequently without the two tax line items.

Can you give me a hint which configuration I am missing here?

Thanks and regards,

Christoph

[former_member222801]

Hi Christoph / Viru,

In our case, I had a discussion with client's TAX consultant, they agreed to book the tax posting at invoice level only.

I just configured the tax code with both input tax (6%) and output tax (-6%), like the screen shot shown in my previous comment.

I mapped the tax code and MWS to 5a and 5b, tax code and VST to 6a and 6b.

The posting and reporting is fine as expected.

You can check with your client on the timing of tax. I heard from the tax consultants that booking tax at invoice level is fine.

Regards,

Vivek

[Former Member]

Hi Vivek,

Thank you for your brilliant solution. I followed your configurations and working perfectly for deferred tax.

But have you ever come across 2 tax codes in one invoice? In our case, tax amount and base amount are populated incorrectly in RFUMSV50 if there are 2 or more tax codes in one invoice. But if only ONE tax code in the invoice, everything is working perfectly.

any solution to solve this issue? please advise.

Thank you for any comments.

Regards.

[Former Member]

Hi,

Please find the attached, It has a solution for 'Service Tax Reverse Charge Mechanism' -- Not able to upload original word file, uploaded in text format, copy it word then check

Sometime back, I had implemented this solution for one of clients, Please go through and check If it can be used there in Malaysia also.

For any clarifications we will discuss this on forum

Thank you,

Gopi

ST RCM Solution.txt.zip

[kamalkumar_biswas2]

I can give you example of Service charge reverse mechanism in India...could be same concept in your case. I never worked on Malaysia Tax procedure.

Reverse Tax is that portion of tax which you deduct from the vendor but to be paid to Tax authority by the service receiver. Suppose you have tax on vendor INR 100 and 50% of it will be under Reverse law..so You have to pay 50% to vendor and 50% to be kept as liability to pay to authority..

If this is your case can be configure through Extended with holding Tax procedure also

[former_member190573]

Hello Kamal Kumar,

Normally for service charge reverse, it will generate the following accounting journals:

1.Dr: Purchase 100$

2.Dr: Input tax   6$

3.Cr: AP                    -100$

4.Cr: Output tax             -6$

In this case, do you have any suggestion to generate the line4 tax account via Extended withholding tax configurations.

If possible, could you please share the related document for WTH tax configurations.

Thanks for your further suggestion!

[kamalkumar_biswas2]

Hi Eric

    You will get additional 2 line items

             Dr input tax 

                   Cr input tax liability / out put tax

If  your issue is solved with the above , pl confirm for further solution

[Former Member]

Hello,experts,

I would like to know the anwer to this question too. Could you help us?

Regards,
Li

[katie_sap]

Hi Al

any suggestions on the above topic?

Thanks

Viru

[former_member190573]

Hello Viru,

Did you fix the problem, I am facing the same issue as you.

Eric