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Friday, January 3, 2014

Give businesses subsidies to cushion GST impact: Pikom

Published: Thursday January 2, 2014 MYT 6:38:00 PM 
Updated: Thursday January 2, 2014 MYT 6:40:42 PM

KUALA LUMPUR: The government should consider offering subsidies to help companies implement the goods and services tax (GST), said the National ICT Association of Malaysia (Pikom).

Chairman Cheah Kok Hoong said the new system was conducive for the country in moving towards a more transparent taxation system, but so far, there was no clue as in how companies could cushion the extra business costs.

"Companies have to bear additional costs in implementing GST systems, such as customising financial systems, including taxation filings and invoice billings," he told Bernama in an interview.

Such solutions implementation costs could start from RM20,000 to over RM200,000, depending on a company's business size, according to Pikom, which has over 1,400 ICT companies as members.

Cheah said the additional costs would be passed onto the consumers if there were no subsidies in place, which would in turn create a one-off inflation in goods and services that have to be GST-compliance.

"By offering incentives to the industry, there will be lesser voice of opposition," he added.

Malaysia is set to impose a 6% GST on major products and services starting from April 1, 2015.

Currently it and Brunei are the two countries that have yet to implement GST within Asean.

Pikom said Malaysia could emulate neighbouring countries, such as Singapore, in formulating measures to help businesses. Singapore, which introduced a 3% GST in 1994, cushioned the impact through an offset package by reducing corporate tax rate by 3% to 27%, and cutting personal income tax by 3% to 30%.

The city-state last revised its GST to seven per cent on July 1, 2007 – Bernama.

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