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The Malaysia Competition Commission ("MyCC") recently announced that the Competition (Block Exemption for Vessel Sharing Agreements and Voluntary Discussion Agreements) Order 2013 ("BEO") was gazetted on 4 July 2014 and has come into effect on 7 July 2014. This BEO was granted by the MyCC pursuant to an application by the Malaysian Shipowners Association, the Shipping Association of Malaysia and the Federation of Malaysia Port Operators Counsel on 16 December 2011. Although the applicants sought a 5-year block exemption and for such exemption to apply to liner shipping agreements in respect of Vessel Sharing Agreements ("VSA") and Voluntary Discussion Agreements ("VDA") entered into by liner shippers in respect of the entire transport chain including intra-modal transport services, the BEO granted is only for a 3-year duration and is more limited in scope as it applies only to transport services provided by liner operators in respect of ocean transport. The BEO therefore does not extend to the entire intra-modal transport services which would have included the carriage of goods provided by logistics providers, forwarders, depot operators, truckers and other service providers.
The VSA and VDA are exempted from the anti-competitive agreement prohibition in the Competition Act 2010 subject to various conditions specified in the BEO. These include the condition that the agreement must be for a reasonable period of time and not contain any element of price fixing, or price recommendation or tariff by the parties imposed on the transport users. If there is a breach of any of the conditions specified, MyCC may cancel the BEO in respect of the agreement, and take enforcement action.
Importantly, parties to the VSA and VDA should note that the VSAs and VDAs must be lodged with MyCC for the BEO to take effect. All subsequent variations are subject to such similar lodgement requirement. Additionally, all transport users are entitled to be furnished by the parties to a VSA and VDA with information in such VSA and VDA concerning pricing or tariff of their individual services, and the structure and service level of the liner shipping services. To this end, the transport users are entitled to examine the VSA and VDA at the parties' offices in Malaysia and at a publicly available internet website.
With the implementation of the Goods and Services Tax Act 2014 ("Act"), the Malaysian Government will impose a single goods and services tax ("GST") fixed at a rate of 6%. The current sales tax and service tax will be abolished and replaced with GST effective on 1 April 2015.
GST is a multi-stage consumption tax which is imposed on the supply of goods and services, including supply of imported goods made in the course or furtherance of any businesses in Malaysia. Under the Act, goods and services may be charged with GST at a standard rate of 6%, zero-rated or exempted from GST. Zero-rated supply refers to goods and services acquired by businesses which are eligible for input tax credit but sold to the consumer at zero rate. The Government has published a Goods and Services Tax (Zero Rated Supplies) Order which lists out the zero-rated items; however, it is anticipated that the Government will release an additional list of zero-rated items under GST when the next Budget is announced.
Any person who makes taxable supplies in Malaysia and whose annual taxable turnover exceeds the threshold of RM500,00 is required to register under the Act, including a person who makes wholly zero-rated supplies. Where a person is not required to register under the Act but voluntarily does so, he is also considered to be a taxable person. Only a taxable person may impose and charge GST on the supply of goods and services to customers.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Christopher & Lee Ong
Level 22, Axiata Tower ,
No. 9 Jalan Stesen Sentral 5
Kuala Lumpur Sentral,
50470 Kuala Lumpur, Malaysia
www.christopherleeong.com
Contacts: Lee Hock ChyeManaging PartnerD +603 2273 1919F +603 2273 8310hock.chye.lee@christopherleeong.comYon See TingPartnerD +603 2278 8311F +603 2278 8322see.ting.yon@christopherleeong.comFiona SequerahPartnerD +603 7958 8310F +603 7958 8311fiona.sequerah@christopherleeong.comLim Wee HannPartnerD +65 62320606wee.hann.lim@rajahtann.comYau Yee MingPartnerD +603 2278 8311F +603 2273 8322yee.ming.yau@christopherleeong.comKuok Yew ChenPartnerD +603 7958 8310F +603 7958 8311yew.chen.kuok@christopherleeong.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
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This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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