KOTA KINABALU - Fees paid to directors or office bearers carrying on a profession or vocation in Malaysia are subject to Goods and Services Tax (GST).
For example, fees paid to a government pensioner who had served with the army or police in Malaysia who is appointed as a private security guard company director in his personal capacity are subject to GST.
Fees paid to a politician in Malaysia who is appointed as a director on his personality (influence like for fund raising convenience) are subject to GST.
Fees paid to a tax consultant, medical specialist, economist, accountant, lawyer, editor etc. in Malaysia who is appointed as a director on his expertise or advisory role, including management of the company but holds positions in companies that are not subsidiaries are subject to GST.
Fees paid to a chartered accountant, for example, appointed as a director in a listed company like Sports Toto as an expert and qualified person who has his own professional practices or hold positions in other companies are subject to GST.
Payments made for members of hospital visitors' board or prison which is not under their personal capacity are not subject to GST.
The exceptions are like for serving civil servants appointed due to the office he is holding like a permanent secretary of a ministry with GLCs, or a private company manager due to his post is appointed a director in a subsidiary firm.
The exception also applies for those who serve on a contract for services, but appointed on the capacity of the office he held and not under his personal capacity. The male gender shall also apply in all cases to the female gender.
This was why some doctors were mad when they are not employed by private hospitals but provide healthcare services to private hospitals under a contract for service or outsourcing services will be deemed as making a standard rated supply to the private hospitals, hence they have to pay GST.
According to news report they filed a suit against the authorities even before April 1, disproving lawyer Chris Tan who gave a GST talk here recently that lawyers have no GST cases to fight prior to April 1.
The Customs stipulate that only healthcare professional employed (under a contract of service – this is where the confusion arises) by the private healthcare facilities providing healthcare services to patients is treated as making an exempt supply. (In other words, only employees are exempted from GST).
Therefore, to recap, a healthcare professional who is not employed by the private healthcare facilities but provides healthcare services to a private healthcare facility under a contract for service or outsourcing services is treated as making a standard rated supply to the private healthcare facilities.
For example locum doctors or a specialist doctor provide their services to a hospital registered under the Private Healthcare Facilities and Services Act 1998.
Formerly the defunct Sabah Medical Centre had a lot of such consultants and now too the other big private hospitals from KPJ, Jesselton, Rafflesia and the upcoming Gleneagles here in Kota Kinabalu.
The Customs consider a healthcare professional under paragraph 18(3)(b) to the Second Schedule of the GST (Exempt Supply) Order 2014 to include a medical practitioner, dental practitioner, pharmacist, clinical psychologist, nurse, midwife, medical assistant, physiotherapist, occupational therapist, other allied healthcare professional and any other person involved in the giving of medical, health, dental or pharmaceutical services under the jurisdiction of the Ministry of Health. No mention of bomoh or sinseh.
Whilst, paragraph 18(2) to the Second Schedule of the GST (Exempt Supply) Order 2014 defines private healthcare facilities as any premises, other than a government healthcare facility, used or intended to be used for provision of healthcare services such as private hospital, hospice, ambulatory care centre, nursing home, maternity home, psychiatric hospital, psychiatric nursing home, community mental health centre, haemodialysis centre, medical clinic, dental clinic and such other healthcare premises as specified by the Minister of Health charged with the responsibility for health by notification in the gazettes under the Private Healthcare Facilities and Services Act 1998.
Pharmacies here have been working up to wee hours of the morning to re-label their price tags to be inclusive of GST, and some close down for a few days for stock checking. Staff of such firms disagreed that the transition had been smooth, when the Customs go by brand names rather than the drug generic name like paracetamol for the brand Panadol with many other similar products with some liable for GST, while some are not.
A Chinese medicinal shop along Jalan Gaya with a sinseh practice for decades closed down on April 1, just next to Gaya Pharmacy, no thanks to the GST regime.
Many members of the public opined that medicines and equipment like wheelchairs etc. that sick people need should be exempted from GST by a caring government.
"People do not enjoy consuming these products or services of the medical healers. GST should only apply to luxury goods like the Chanel handbag reported in the newspaper that cost thousands of ringgit. Why tax me for a tin of sardine or a Maggi mee packet?" asked an old man who found that his sinseh and the Chinese medical shop no longer in business Saturday.
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