Over 400,000 companies have registered for the GST in 2015 and the government hopes to achieve a revenue collection of RM39 billion in 2016 compared with RM27 billion last year.
Desmond Anil, director of Hernancres Tax Consultancy Sdn Bhd, lauded the ongoing efforts by the Customs Department ever since the announcement by the government of its decision to implement the GST during Budget 2014 .
“From the planning stage, theories, problem-solving to the execution stage, the department had carried out many programmes to help businesses, such as hand-holding programmes,” he said.
However, being still on the learning curve, he said a bumpy road was still expected ahead this year before things eventually smoothen out.
“Both parties, the Customs Department and businesses, should continue to be flexible, learn from one another and bridge the relationship gap by changing to a better or standard way of doing business, invest in human capital to be more knowledgeable in creating a win-win situation,” said Desmond.
He also felt that the government should retain the current 6% rate for GST to ensure a smooth transition of the system from the previous Sales and Service Tax system.
“Keep the GST rate standard for at least the next two or three years. Because if you start changing, business owners and their staff need to be re-trained,” said Desmond.
GST expert Yap Shin Siang said companies, mainly the small and medium enterprises (SMEs) which registered for the GST system, have shown improvements in complying with the regulations and were now better prepared to submit their GST return documents (GST-03).
Yap, who is also managing partner of accounting firm YYC & Co, said during the first few months of the GST implementation, some companies could not submit on time and even consulted the firm at the last minute.
“Businesses are getting the hang of it and they can now send their documents earlier for us to review.
“But whether they are doing it 100% correct, that is another question,” she told Bernama.
She noted that from over the 1,000 companies which the firm had reviewed for GST, it found that the 10 top common mistakes made during GST submission were mainly done by SMEs.
“The top common mistake is claiming input tax credit for passenger vehicles when they are not supposed to under the GST model.
“The second is not filling the GST return form appropriately. For example, in box 12 where they receive interest or foreign exchange gain but did not disclose the information. And thirdly, when they sell assets, they forget to charge GST,” she said.
The fourth common mistake was that most retail businesses were still issuing handwritten invoices, especially the six category retailers – hardware shops, restaurants, mini markets and sundry shops, book stores, pharmacies and places of entertainment, said Yap.
Other common errors by businesses include not issuing tax invoices when payments were received in part or in full, no sufficient documents to prove goods had been exported and not being registered for GST because they were unaware of their threshold and did not keep track of their accounts.
Yap said companies also did not account for output tax when presenting gifts over RM500, did not charge output tax when disposal of business assets and get confused with the GST treatment on reimbursement and disbursement.
She said the Customs Department would conduct a few audits soon and as such, SMEs should always do a self-check by themselves or else they would face a number of problems in their GST returns.
“In my opinion, as we move into phase two, the majority of the businesses are still not aware of the mistakes being done or they do not know how to solve the problems, particularly on the details of GST.
“From our record, about 80% of the companies will have at least one or two mistakes, and this is a high percentage,” she said.
As for consumers, Yap said, although they have no choice but to pay the tax, they should view it in a bigger picture as the broad-based consumption tax has helped the country during the current economic uncertainty coupled with the drop oil and gas revenue.
“The government needs sources of revenue, so if we can keep that openness, we will feel better. Moreover, it is more transparent. And now that everyone contributes to it, it is an equality, in a way,” said Yap.
Recently, Deputy Finance Minister Chua Tee Yong said the GST refund claim amounting to RM800 million was still pending due to a few reasons.
Among them were the inability to contact businesses during the stipulated seven days after the issuance of a notice to provide information, failure to respond to queries and incomplete banking details.
“In April 2015, 7.8% of the claims were processed within 14 days, while in December, the percentage rose to 66.6, but there are still some hitches in the payment of GST refunds to the companies concerned,” said Chua.
– BERNAMA