Excerpt from the Goods and Services Tax Regulation

100. (a) Notwithstanding Sections 17(a) and 17(b) of the Act, where a person registered with the MIRA other than under the Tourism Goods and Services Tax Act (Law Number 19/2010), signs an agreement before the ratification of the Act for the supply of goods or services, and the agreement was entered into under the supplier’s normal commercial practices, and work on the delivery of the goods and services so mentioned in the agreement has begun prior to the ratification of the Act, tax shall not be chargeable on that supply if the tax invoice is issued or part or whole of the payment is received for that supply within 1 (one) year from the date of commencement of the Act.

For a contract to be eligible for the leeway granted under section 100(a) of the Goods and Services Tax Regulation, all of the following conditions must be satisfied:

1. The contract shall not relate to the supply of a good or service that would have been subject to tax under the Tourism Goods and Services Tax Act; and

2. The contract must have been signed before 2 September 2011; and

3. The contract must have been entered into under your normal commercial practices; and

4. Work on the delivery of the goods and services mentioned in the contract must have begun prior to 2 September 2011; and

5. Either party to the contract must not have agreed to bear or pay taxes or fees introduced after the date of contract; and

6. The value of goods and services to be supplied under the contract must have been predefined in the contract.

GST registered persons falling within section 100(a) of the Goods and Services Tax Regulation, performing contracts that satisfy the conditions above, are required to register such contracts with the MIRA on or before 28 November 2011, in order to opt in to S.100(a) Scheme and be eligible to claim input tax pertaining to such contracts. Input tax pertaining to contracts not registered with the MIRA by the deadline shall only be deductible in taxable periods that the contract is registered with MIRA. Further such contracts must satisfy the conditions above.

In order to register your contracts, please complete and submit MIRA 107 [S.100(a) Contracts Registration], which is attached with this Tax Ruling and available for download from our website. You are required to submit copies of all eligible contracts along with the registration form.

Once the contracts are registered, the following procedures shall be followed:

1. MIRA shall issue a unique ID upon registration for each contract registered under this Tax Ruling.

2. Registered persons shall not charge GST (i.e. output tax) on transactions whose time of supply falls between 2 October 2011 and 1 October 2012. This means that registered persons shall not charge GST when they prepare tax invoices or receive payments under such contracts on or before 1 October 2012.

3. Registered persons may claim input tax pertaining to expenditure that is directly attributable to such contracts, in their GST returns. Input tax shall not be deducted based on tax invoices that do not satisfy the requirements of section 42(a) of the Goods and Services Tax Act. In addition, input tax shall not be claimed against tax invoices which have not been settled as of the date of filing the relevant GST return.

4. Registered persons must submit a Statement of Input Tax (refer to Annex 1) separately for each registered contract, and submit copies of all tax invoices included in the Statement, along with their GST returns.

5. Registered persons must submit a quarterly Contract Progress Report (refer to Annex 2) as follows:

(a) Report for October to December 2011, to be submitted by 28 January 2012

(b) Report for January to March 2012, to be submitted by 28 April 2012

(c) Report for April to June 2012, to be submitted by 28 July 2012

(d) Report for July to September 2012, to be submitted by 28 October 2012

Failure to submit the quarterly Contract Progress Report may result in not being able to claim input tax pertaining to contracts specified under S.100(a) Scheme.

6. Where, other than a variation specified in a contract which does not result in any further work, the terms of the contract are reviewed after 2nd September 2011, registered persons must account for GST on all the transactions under the contract whose time of supply falls after the reviewed date.

7. The leeway granted under section 100 (a) of the Goods and Services Tax Regulation shall cease after 1 October 2012 and the Registered persons shall account for GST on all transactions whose time of supply falls after 2 October 2012.

Should you have any queries, please call us at 1415 or email us at [email protected].

Statement of Input Tax

TIN:            
Taxpayer Name:    
Taxable Period:      
Contract ID*: 

* This field needs to be completed only by persons that had opted in to S.100(a) Scheme.

Contract Progress Report

TIN:            
Taxpayer Name:    
Reporting Period: