ADDRESSING ISSUES: (From left) Choo, Koh and E&Y Kuching partner Alexander Chin during the press conference following STA’s meeting with TRP. STA has had three meetings with TRP to address about 30 areas of concern arising from the GST implementation.
KUCHING: The possible implementation of the Goods and Services Tax (GST) will leave a sizeable impact towards companies undertaking corporate social responsibility (CSR) projects, especially timber players.
This was among several issues brought forward by the Sarawak Timber Association (STA) during its meeting yesterday with the Tax Review Panel (TRP) under the Ministry of Finance here.
The idea of GST was first mooted back in 2005 to give rise to new ways of operating businesses and present a richer scope for business efficiency, compared with the current sales tax and services tax.
However, the GST implementation did not take into account its impact towards CSR projects undertaken by corporations, especially by timber players who contribute a sizeable amount of earnings towards CSR projects in logging areas.
This was further compounded by the lack of awareness by players here as uncovered by the association’s survey to gauge its members’ awareness and readiness for GST implementation.
Honorary treasurer Phillip Choo revealed that the group submitted a Memorandum on GST for forest and timber industry in Sarawak, assisted by Ernst & Young Tax Consultant Sdn Bhd (E&Y) to the TRP back in 2006.
Since then, STA has had three meetings with TRP to address about 30 areas of concern arising from the GST implementation, including general issues, issues on upstream and downstream activities, administrative and compliance matters as well as transitional issues.
“One of the major items identified as a problem area is the huge expenses incurred by timber companies to provide a lot of community projects for logging areas, such as educational facilities, healthcare, basic infrastructure and environmental projects,” revealed E&Y executive director, Koh Siok Kiat during the press conference.
When GST is introduced, Koh said there would be input tax on these expenses incurred. Under the normal GST rule, the normal tax incurred on these community project expenses would not be claimable as an input tax credit.
“Thus, STA has brought this up with the TRP on the matter,” Koh added. “Community projects are part of business expenses of the companies. The panel will come up with a guideline to allow for input tax to be claimable for expenses incurred for these kind of community projects.
“This is one of the major successes thanks to the persistence of STA in pursuing these issues,” he said.
“Another issue is regarding major exporters,” added Koh. “Quote a number of STA members are major exporters and exports are actually zero-rated.
“Therefore, input tax incurred on expenses are claimable as a refund. TRP has promised to adhere to the target of refund within 14 days. They will try to keep to this target.”
Choo highlighted on the importance for companies to obtain their refund within 14 days, judging from the high amount of refund which could reach hundreds of millions in total for these players.
“The principal of GST should not be at a cost to companies,” he opined. “If they fail to refund the tax in time to companies, this will cause cash flow problems for the players.
“That is why we are very particular on this issue.”
When asked whether TRP had indicated when GST would officially be implemented, Koh believed that there would be an official announcement made after the general election.
Thus, there was a great need for businesses to prepare for GST right now as the window for preparation might not allow for much time.
During the press conference, Koh also revealed that TRP would provide assistance to SMEs in terms of purchasing GST-compliant softwares to aid their process of coping with CST compliance.
Read more: http://www.theborneopost.com/2012/07/12/sta-trp-gather-to-discuss-gst-impacts/#ixzz2WC49Q9EM
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