| January 10, 2014
By P Prem Kumar
KUALA LUMPUR: Companies should conduct an in-depth analysis as well as carry out a self-assessment to determine whether they are ready for the Goods and Services Tax (GST), which will be effective on April 2015 at 6%.
CIMB Group Holdings Bhd regional tax head Sam Chay said preparations are crucial to avoid incurring heavy non-compliance costs, which include higher maximum penalties including imprisonment or fines.
Speaking at the recent CIMB 6th Annual Corporate Day, he said a company should do a mapping of the entire procurement and supply chain to identify claimable inputs, cashflow impact, employee benefits and price impact.
“It also needs to identify areas that would be impacted by GST and restructuring options and needs to go through the GST draft regulations and guidelines that are released by the Customs Department.
“It can highlight industry issues through industry associations and other appropriate forums as well as communicate with the department, and it needs to ensure that all its staff are well equipped with general GST knowledge by conducting training and developing training modules to achieve compliance with the procedures prescribed under the GST legislation,” he was quoted as saying in a flash note, issued by CIMB Research.
Chay also recommended local entities to ensure that the necessary processes and systems are all in place as timely registration is a must and trial runs must be conducted.
GST is a multi-stage and broad-based consumption tax, which replaces the Sales and
Service Tax (SST).
Chay said while the GST provides a stable source of revenue to support the government’s fiscal operation, it also helps to lower the cost of doing business through input tax recovery as it offers a fair pricing to consumers through greater transparency, fairness and equality-enhanced delivery systems.
He also said the winners of GST are taxable and zero-rated suppliers as they can claim back their input tax for GST, as well as GST and IT consultants, while the losers are exempt suppliers who cannot claim back all their input taxes as well as consumers.
“In theory, consumers should pay less if the 10% SST is abolished and replaced by a 6% GST, provided that businesses do not abuse the system – though there is strict enforcement to check unfair pricing as well as a deterrent provided by the Anti-Profiteering Act,” he added.