**Please take note that this article will not continue to update due to new tax codes announcement by RMCD on 01/08/2016. This makes the chart of accounts mapping with GST Codes are more complex and it is subject to the application of your business. - 05/08/2016**

Latest Update *21/11/2015. GST has passed 7 months and most organization have completed first submission. It is the time to review your Chart of Accounts analysis with tax code to ensure accuracy.

GST is going to kick start in Malaysia on April 1, 2015. This article publishes in a timeline of two days before April 1, 2015. Chart of accounts analysis shall perform during the early stage of project management to discover the scope of supply and acquisition via the inherited nature accounts codes. However, it seems that it is not done thoroughly at the beginning from the observation on the business prepareation by the corporate and SME. Now many people are over-worrying about what tax code to apply to their business transactions. I advise that you need to focus on what happen to your organization and you will not require to know the entire GST mechanism as some practices may not impact to you.

I would like to share my insight as a project manager for GST System Changes. Even though my forte is not on how to interprete GST mechanism, I gather quite a lot of resourceful information during GST System Changes projects.

The first thing in project management is how to identify your scope of supply and acquisition via Chart of Accounts. Have you identified anything if it is not falling into the goods and services?

Let's look into the scope of supply

What kind of supply and where do you sell? We get it by referring to the revenue chart of accounts in Profit & Loss. We need to look into the type of supply that make up the revenue for your organization. This is customers. We would like to quantify as whether your customers are consumers, businesses, government, overseas, designated areas, special zones and consideration. If you know the above, then you can identify the customer group and assign tax code to them. For example, any customer in overseas shall use Out of Scope Supply (OS) and Exportation (ZRE) in your item setup that linked to revenue, sales and services accounts. We can then perform exceptional checking if there is standard rated tax code (SR) accidently assign to revenue accounts and customers. Once you have this scope of supply identified, you already know the GST tax code that applies to your receivables, debtor and revenue accounts.

Let's look into purchase and acquisition

As a business, we incur trade purchase, acquisition of fixed assets and paying expenses for sundry services and many other types of cash outflow. What is the scope of purchase and acquisition that you handle in your organization?

As long as we consume goods and services, then we incur expenses and acquisition of fixed assets. Fixed assets are classified as capital goods in GST. What are the tax code that shall apply to our purchase and acquisition of capital goods.

First is to classify whether that expense or capital goods will buy from Non GST registrant. If the answer is yes, then you have NR. Please take note that not all expense accounts can use NR. Bank charges will not use NR as all banks in Malaysia are GST registrants.

Whoever makes goods and services as GST registrant have to use TX if it is within Malaysia mainland and allowable to claim input tax. For example, processed material, industrial products, printing, stationery, audit fee and many others

Second is to determine whether you make exempt supply and fulfill De Minimis rule. If you do make exempt supply, you can ignore TX-RE, TX-E43 and TX-N43. If you are mixed supplier, then you use TX-RE instead of TX.

There are purchases and expenses which do not pay GST. These are zero rated items. It depends on your trade purchase and company expenses will have these kind of zero rated items or not. For example, petrol, newspaper, international air tickets and many more. You may need to assign tax code ZP on it.

There are other tax code such as OP and EP. I would use OP for transactions like salary, allowance, overseas purchase and expense and overseas travelling claim. These expenses nature are money and expenses are incurred out of Malaysia. I will use EP for transactions that incur in medical (clinic and hospital), toll and taxi

Expenses that can not claim GST are those expenses explicitly mentioned by block input tax. For example, passenger car's expenses like repair and maintenance, club membership, entertainment to non customers and staff, medical insurance and others. These accounts shall assign BL as GST code.

You have identified quite a number of purchase and acquisition tax code now. What are the remaining? It is importation. GST for importation is paid upfront upon Customs clearnace. If you import goods from overseas, the importation must clear from customs control and therefore you use IM as GST code. If you are ATS, ATMS and AJS, you may suspend GST upon importation and you shall use IS.

Other than the above, GP and GS will apply if it is group registration. AJP and AJS are used for adjustment.

Accounting transactions such as prepayment, accruals, provision, depreciation, journal reclassification, stock adjustment are without the implication of GST. It may use OP or blank for the transaction types.

We have only 23 GST codes and it is not that difficult to classify all chart of accounts for the tax code assignment. I hereby attach my chart of accounts analysis that prepared from my projects. These analysis are for reference only and I wish to emphasize that this is not intended to use officially by any specific organization.