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Thursday, November 7, 2013

KPMG urges domestic firms to prepare early for GST

by Ronnie Teo, Posted on November 7, 2013, Thursday
UTILISING TIME WELL: Photo shows a woman doing grocery shopping for
basic goods which are exempted from the GST. With a lead time of 17 months
to get themselves ready for the tax, businesses should make good use of the time
to be GST-ready. — Bernama photo

Regina Lau
KUCHING: Businesses need to determine whether they are eligible for the goods and services tax (GST) and, if they are, what steps are necessary to prepare themselves before April 1, 2015.

This notion was highlighted by KPMG Tax Services Sdn Bhd (KPMG) during a tax seminar on the Budget 2014 proposals yesterday.

“GST registration requirement and the need for tax invoices will bring all round tax compliance and push the informal sector into the tax net,” outlined KPMG Kuching executive director, Regina Lau in her opening address.

“We understand that the GST bill which will be tabled sometime this month will allow the Royal Customs Department to pass revenue information to the Inland Revenue Board (IRB).”

Lau noted that the proposal to introduce GST comes with a package of tax measures involving a reduction in personal income tax rates and corporate tax rates which will be effective from 2015 and 2016 respectively.

“Equally welcome are the allocations of funds as training grants to enable businesses to send their employees for GST training as well as financial assistance to small and medium enterprises (SMEs) for the purchase of GST-compliant accounting software,” she added.

“Details of the funds and procedures for application and disbursements are not yet available and we hope that they will be announced without delay.”

In the transition towards GST, Lau anticipated the IRB and Royal Customs Department to intensify their efforts to ensure tax compliance and increase tax collections all over the country.

“The recent release of the tax audit framework covering income tax, petroleum income tax and transfer pricing is indicative of that direction.

“IRB has and will continue to work together with Customs, Bank Negara and the Attorney General to stem out tax evasion, under-declaration of customs duties and money laundering.

“During the transitional period before sales and services tax are abolished on April 1, 2015, there will definitely be intensified sales and service tax audits by Customs – in fact, this is already actively happening in Peninsular Malaysia and is commencing in Sarawak,” she highlighted.

With a lead time of 17 months to get themselves ready for the tax, Lau advocated for businesses not to procrastinate and instead make good use of the time to be GST-ready.

“It is not merely about GST collection on behalf of the government,” Lau emphasised, adding that the basic principle is not to undercharge, and not to overclaim.

“Businesses should therefore make early plans to put in place the infrastructure and suitable safeguards to avoid penalty risks.”

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