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Don't Wait To Be GST-Compliant, Companies Urged
KUALA LUMPUR, July 15 (Bernama) -- With the goods and services tax (GST) to be implemented on April 1, 2015, the clear message to all companies is to start preparing early. Don't wait!
The sooner they start, particularly in incorporating GST-compliant software and training, they can avoid bottleneck situations most likely to happen closer to the implementation date.
As the just-ended National GST Conference 2014 organised by Malaysia's national news agency BERNAMA and Tax Advisory and Management Sdn Bhd (TAMS), showed, many companies and businesses are still vague about the GST.
With the effective date of implementation less than nine months away, one can assume that time is running out, more so, since most firms seem to be adopting a 'wait-and-see' mindset in preparing themselves.
Obviously, the state of readiness among companies is far from satisfactory, but the lack of understanding is an unacceptable explanation for avoiding to prepare.
Some participants admit being far from ready and certain companies said they are unwilling to make a major conversion ahead of the Budget 2015 announcement.
It is true that concerted efforts at all levels, especially from the government and its agencies - particularly the Royal Malaysian Customs Department - is needed to ensure businesses are adequately prepared.
But companies themselves need to play a more proactive role in seeking information and assistance.
This is because the GST will affect all businesses, whether they sell goods or provide a service and their state of preperation matters.
It will also impact all parts of operations starting from the IT system, procurement, sales and marketing, the price setting department, supplier and customer relationships to cash flow.
TAMS' Executive Director Yong Poh Chye said normally it takes about 18 months for companies to prepare for the GST, but they now had only nine months to do so.
Time is running out and they have to redouble efforts to ensure their businesses are GST-compliant by the time of implementation, he said.
Yong explained that companies needed to train their staff on the GST, acquire GST-compliant accounting software and commence trial runs by January 2015.
At present, he said only 50 per cent of companies in the country were GST ready.
"Many businesses are unaware that they need to upgrade their accounting software to comply with the GST," Yong added.
Such software upgrades cannot be done at the last minute, as extensive preparation and training is required.
There is plenty of assistance being given by the government to ease this conversion process, especially for small and medium scale enterprises (SMEs).
The government allocated RM150 million under the Budget 2014 to assist SMEs in purchasing the GST compliant accounting software or for upgrades, to be GST compliant.
This includes encouraging SMEs to use an effective and efficient accounting system as well as increase the GST compliance rate.
Financial assistance is also provided by SME Corp Malaysia in the form of a GST eVoucher worth RM1,000.
In addition to the allocation to purchase the GST software, the government is also providing training grants worth RM100 million to businesses to send their employees for training in 2014 and 2015 on the new tax regime.
This includes an accelerated capital allowance until the year of assessment 2015 for the cost of purchasing ICT equipment and software, tax deduction on expenses incurred for training in accounting and ICT related to GST for the years of assessment 2014 and 2015.
Other incentives are a reduction in the corporate tax rate from 20 per cent to 19 per cent from 2016 for small businesses and tax deduction for secretarial fees and tax filing fee from 2015.
It is estimated that almost 25 per cent of SMEs (around 160,000 businesses) will find themselves embracing the GST at the registration threshold value set at above RM500,000 a year.
SMEs with annual sales of less than RM500,000 are advised to evaluate and volunteer to be in the GST system, which will bring many advantages over the longer term.
The GST at six per cent is aimed at enhancing the efficiency of the tax collection system.
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