SMEs: GST adding to pain as incomes fall 20pct

Since the implementation of the Goods and Services Tax (GST), small and medium enterprises (SME) have seen their incomes fall by at least 20 percent. 

Admitting the decline was due to several factors, SME Association of Malaysia president Michael Kang however said the GST has compounded the situation. 

“The exchange rate of the ringgit has dropped, making imports less profitable. Recent issues with foreign workers have also hit smaller businesses hard. They cannot cope,” Kang was quoted by English daily The Malay Mail saying. 

“It has been especially acute over the last six months as consumers understand the price of goods is much higher and have cut down their spending significantly.” 

Finance Minister II Johari Abdul Ghani last Saturday denied that GST had come at the expense of consumers and businesses. 

Johari said GST has streamlined tax collection and the government has been able to collect a far greater percentage of the taxes owed to it. 

Meanwhile, Kang said many small businesses have also come under intense financial pressure due to poor sales. 

“It is not confined to one sector, everyone from cottage industries to restaurants are feeling the pinch. They had to lay off staff and cut back on the variety of goods they offer,” he said. 

In its 2016 taxation survey report, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) found that the GST had increased costs for small businesses. 

The report also found 58 percent of respondents had reported problems with cash flow and 79 percent of those whose applications for refunds were rejected claimed they did not know why their requests were not approved. 

Kang said the reason for high rejections was partly due to a lack of awareness of what documentation was needed to make claims. 

He has therefore asked the Customs Department to open a special counter at their offices for a month to help sort out the issue. 

The Customs Department, added Kang, had agreed in principle to his suggestion. -Mkini