A year on, some businesses still unclear about GST

A year has passed since the implementation of the Goods and Services Tax (GST) in Malaysia on April 1, 2015, and yet there are businesses that are still unclear about its requirements and rules.

According to a recent survey on Malaysia’s economic situation in the second half of 2015 by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) (unveiled last Tuesday), 68 percent of its respondents reported that they still do not fully understand the workings of GST and how it affected their businesses, while 10 percent are unclear about GST.

The survey also revealed that most businesses still depended on assistance from their respective agents and accountants to understand GST better.

That could be a reason why auditing and tax advisory firms nationwide are now busier than ever.

Since the passing of the Goods and Services Tax (GST) Bill 2014 in Dewan Rakyat on April 7, 2014, firms such as YYC Advisors had conducted numerous GST seminars for their business clientele to help them understand GST and prepare for its implementation.

“We have identified several common mistakes made by companies while filling their GST returns,” said YYC Advisors partner Yap Shin Siang in a press conference on Wednesday.

Among the common mistakes Yap highlighted were when a company did not declare the interest income it received and the foreign exchange it gained or lost in the GST-03 return form; or when a company claimed input tax incurred on “passenger motor vehicles”;

Since the implementation of GST, all businesses are required to file a GST return once a month, or on a quarterly basis.

It is during these filing processes where some companies make mistakes, said Customs Department deputy director-general Subromaniam Tholasy, as reported by The Star on July 20, 2015.

In the report, Subromaniam was quoted as saying that the delay in certain businesses’ input tax refunds was due to them having filed their GST reports badly.

“Apparently, in some cases where sales came up to RM1 million, output tax was also recorded as RM1 million. In other cases where companies exporting goods from Malaysia should have filed their submissions as zero-rated, some erroneously filed theirs as ‘standard-rated’.

“Apart from that, there is no profile of these companies on our records, so we are building their profiles as quickly as we can. It is impossible to complete this in two weeks,” Subromaniam said.

“The world average for the refund of the GST claims is 56 days from the date of filing. We are aware that our Act (GST Bill 2014) says 14 to 28 days, but these are the challenges we are facing. We are rectifying and resolving many errors in filing,” he added.

Better understanding now

However, the number of companies that had completed their GST submissions correctly had increased dramatically since the report last year, which mentioned that only over 60 percent of companies which filed their GST returns had received their input tax refunds.

When contacted by Malaysiakini yesterday, Subromaniam said that 95 percent of companies had now successfully submitted their GST.

As for the remaining 5 percent of businesses who are still making errors in their GST submissions, Subromaniam said the Customs Department had been conducting learning programmes to guide them in gaining a better understanding about GST.

The Customs Department and auditing and tax advisory firms are not the only entities that are helping businesses to better understand the one-year-old GST.

SME Association of Malaysia president Michael Kang said the agency is still receiving calls for help from companies who face challenges in filing their GST returns since its implementation last year.

“When a company’s input tax refund is held up by the Customs Department, they may face cash-flow problems in their business’ operating and human capital expenditures.

“That’s why we (SME Association of Malaysia) are always ready to aid companies in filing their GST returns,” Kang added. -Mkini