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Monday, November 4, 2013

Be GST-ready by 2015

Publication: NST
Date of publication: Nov 4, 2013
Section heading: Main Section
Page number: 019
Byline / Author: By Zuhaznim Izzuddin

THE budget contained measures to strengthen the country's fiscal position, ensuring the wellbeing of the people, prioritising infrastructure projects by emphasising those with high multiplier effect and low content to support economic growth, strengthening small and medium enterprises, intensifying efforts to encourage research and development, ensuring quality in the education system, expanding the Internet access, etc.

With the introduction of the Goods and Services Tax (GST) in 2015, which replaces the Sales and Services Tax, there will be a reduction in corporate and personal tax rates. There was also property cooling measures introduced with increases in the Real Property Gains Tax rates for disposals of property. The government has also proposed double deduction for selected training expenses to encourage companies to adopt and implement Flexible Work Arrangements (FWA) to retain talent.

This incentive is given to employers in respect of approved FWA status applications received by Talent Corporation Malaysia Berhad between Jan 1 next year to Dec 31, 2016.

As widely debated and anticipated, GST was mentioned in the 2014 Budget. Such tax is meant to be comprehensive, efficient and transparent. Analysts expect the GST to broaden the government's tax base and will be effective from April 1, 2015 at the rate of six per cent. Businesses are given 17 months to prepare for the implementation of GST.

Given the implications to business operations, there would be huge preparatory costs involved. Recognising this, the government has proposed expenses incurred in purchasing ICT equipment and software are allowed accelerated capital allowances. In addition, expenses for GST-related training of employees in accounting and ICT are given further tax deduction.

Tax deductions have been given for secretarial and tax filing fees of up to RM5,000 and RM10,000 respectively for assessment year 2015 and subsequent years.

Given the fact that GST will be considered a game-changer to businesses, Corporate Communications Chartered Secretaries Malaysia (MAICSA) members are urged to prepare and plan early and be GST ready before April 1, 2015.

In this respect, it is made known that the government has a special allocation to create awareness on GSTamong government institutions, corporate bodies, non-governmental organisations and academic groups and will also be reaching out to the people to explain more about how GST will be implemented from April 2015.

Following the announcement of GST and in line with the new Malaysian Code on Governance 2012 (MCCG 2012), MAICSA members, and especially as chartered secretaries, have a vital role to play in advising board members to develop principles of good corporate governance with regards to managing risk assessment and control.

Hence it is the duty of the board to ensure that effective internal control procedures are adopted for GSTimplementation.

It is anticipated that in the months to come, it would be part of the boardroom agenda to include the topic of GST implementation as part of the company's responsibility to determine its risk management framework and internal control procedures.

This is important as by April 2015, all affected companies and organisations must have the ability to deliver the right tax at the right time through processes, systems and skills, not forgetting managing the levels of inherent risk arising from the complexity of the business structures and regularity of change in business models, etc.

Zuhaznim Izzuddin, manager, corporate communications, Chartered Secretaries Malaysia

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