A Malaysian manufacturing company, XYZ, uses three tons of raw materials to produce the finished product. It imports two tons of raw material from Canada and purchases one ton of complementary raw material from Malaysian suppliers. XYZ then manufactures the product from the raw material to produce goods ready for customer use. The company then sells the manufactured product to the Malaysian market and abroad.

Given:

• VAT rate for manufactured products is the standard rate (14%).

For the Imported Raw Material:

• The two tons of raw material imported from Canada cost RM 3,500,000.
  • For the two tons from Canada, expenses paid at the customs authority are RM 60,000 and VAT paid on raw material cost RM 490,000.
• A consultation service expense related to the importing of the raw materials from Canada is RM 110,000. As per the schedules annexed to the law, such service is subject to 10% VAT.

For the complementary Malaysian Raw Material:

• The one ton of complementary raw material purchased from the Malaysian suppliers cost RM 1,000,000, (including VAT).
• A transportation expense related to transporting the raw materials within Malaysian was RM 20,000. Such service is subject to the standard rate.

Required:

(a) Prepare the VAT calculation if the entire product is sold in the Malaysian market, assuming the selling price is RM 7,000,000.

(b) Prepare the sales tax calculation if the entire product is sold abroad, assuming the selling price is RM 9,000,000.