Co 1 S/B (Malaysia) issues invoice to Co 2 S/B (Malaysia) for radio survey work carried out on the offshore rig (Singapore flag) but work performed offshore at Terenganu. However, no GST was charged by Co 1 S/B.
Co 2 S/B issues invoice to Co 3 Pte Ltd (Singapore) for the reimbursement of payment made to Co 1 S/B for radio survey and also charged 5% handling fee.
Should Co 2 charge GST to Co 3?
The reimbursement cost is a supply. As the initial transaction was not charged GST, therefore the reimbursement cost is ZR. The handling fee is an export service to outside Malaysia, therefore ZR.
Is the above treatment correct ?
Yes, it is a reimbursement to Company 2, right? Reimbursement cost need to charge GST unlike disbursement.
Let me ask you, why Company 1 has to bill Company 2 and then Company 2 has to bill Company 3 in Singapore? Why can’t Company 1 bill direct to Company 3? Please clarify this.