The Malaysian Government is quite set to introduce introduce the Goods and Services Tax GST in
Malaysia. While the exact date has not being given, it is now expected in
2014. Whichever date it is, the Government has mentioned that they will give ample time between 18 to 24
months for the businesses and industries to prepare themselves for the
implementation of GST
Who are the people who will be affected by GST implementation
1. All consumers (individuals and companies) in Malaysia who buys taxable goods will be paying for the GST. This cover practically every item sold in Malaysia except for the utilities and necessities.
2. Companies who manufacture and sell taxable goods will collect the GST on behalf of the government, and remit the tax when due
About 122,000 companies will be affected by the eventual implementation of the Goods and Services Tax (GST).
Within these companies, it will affect everything from human resources policies, and systems and processes relating to stock management and invoicing. The introduction of GST will involve more than just the accounts department.
How can companies prepare for GST?
The GST amount can be large for some businesses. Company owners must make sure their business managers have a good grasp of the mechanics of GST to enable them to develop . strategies to tackle the implementation issues. Proper planning and execution is necessary to ensure that the company's profitability, competitiveness, costing and cash flow will not be unduly affected by the implementation of GST.
Some areas that companies need to take note are :
- Contracts signed from now on would need to include a provision to review for post GST implementation.
- Understand the scope of taxation under GST environment. If your company is exempted from GST registration (as it falls below the income threshold) you might want to weigh the cost and benefits of applying for voluntary GST registration
- Whether it is more beneficial to register for GST registration as a single entity or as a group, and what paperwork is required
- Find out what are the grey areas in computing the taxable and non taxable component of a product, and resolve with the relevant authorities to get the most effective method to apportion the cost
- What are the conditions for preferential treatment of GST and how you can qualify for it
- Understand clearly when the tax is due for submission so that you can plan your cashflow well.
- For certain industries, such as the construction industries, it is important to find out how the treatment of income recognition and accrual of expenses will affect the timing of GST due and payable.
The body that is driving the implementation of GST is the Taxation Review Panel set up
by the Ministry of Finance. You can refer to the Ministry officials if you are in doubt.
One important area that you can start looking into is to invest in an accounting system that is GST ready.
