GST : Giving Pressure to SME ?
Comes into GST calculation again,
For example, for Pemborong calculation, Cost RM30, Selling Price RM40, Profit RM10.00
Assuming no additional cost and no changes of selling price, Pemborong is able to make a profit of RM10.00, this profit is a Value Added differences, which subject to 6% X RM10.00= RM0.60.
Probably the answer is GP profit x 6% = RM0.60 out from your GP profit.
However, mind twisting calculation, GST has to be done through in accounting as for the following
a) Paid to the vendor (RM31.80) : RM30 x 6%
b) Received from Customer RM42.40 : RM40 x 6%
c) Pay to GST Custom (RM0.60) : Contra
You are actually getting the same RM10.00 profit without increase price with same profit margin, which is not from your GP Profit. Custom getting RM0.60
However if ignoring input tax pay for vendor, it would be
a) Paid to the vendor (RM31.80)
b) Received from Customer RM42.40
c) Pay to GST Custom (RM2.40)
You are getting the same RM8.20 profit only. Custom getting RM2.40.
With the threshold of yearly revenue RM500,000 would put a lot of SME into the GST registration. I have attended few seminars talk on GST, and I am experiencing the crowd or the audience are becoming more alert and aware to the GST. They started to ask questions and surround the GST officer during Tea Break. The audience was basically coming from different background and industries.
I noticed some of the questions given unanswered while some of the questions answer was rather ridiculous, which change the way how business should operates.
One of the example which suggest if the normal operating business receive part payment for the goods, with no intention of refunding, the deposit or the part payment is considered to have GST, when first payment received even though the completion order is to be taken place for about 3 months. I might notice that the "deposit" or "advance payment" or "part payment" or "progressive payment" into GST calculation.
During the seminar, the crowd pops up so many questions at once if the topics left unanswered or with an unsatisfied answer.Well, this is not the end, GST is progressing itself into coming months, such as corporatize the Royal Malaysian Customs Department? For either to further enhance the process or to have a person to be blamed on if unsuccessful implementation instead? or how the funds comes and go, and how people is going to audit this kind of process? and how people are going to feel the benefit from GST within 6 months or after 2 years? or increase GST rate more than 6% rather than ever thought of decrease GST rate in coming years?
As usual, there won't be any measurement or ratings to this such as quality of life is degrading or upgrading as compare to Singapore, just like how Malaysia university ranking.
So how would the reaction of the people in SME in general which left uncertainty but with promises from the government that always put other GST countries on the table as a proof for it.
Some of my friend would start to rethink about the business, whether
a) continue the business
b) to shut down the business
c) to divide the whole business
d) to slow down the business
e) to improve the business
What I do is to advise them is to improve the business, because to divide the business would incur more expenses due to the resources is not meant to be sharing such as shop, factory, finance, staff and top management people. SME has to be start thinking about the Customer and Suppliers which might in the other way round
a) continue their business
b) to shut down their business
c) to divide their whole business
d) to slow down their business
e) to improve their business
There would be less cashflow with the monthly approx 6% over gross profit given to the custom, the concept is a more alike
a) 6% monthly sales commission
b) franchise business
However the twisted calculation is a proof that you are getting the profit back, how come?
Therefore, to show impact on timeframe, cashflow is outflow faster than inflow although the profit is exactly the same. That's why customer and inventories level need to be structured right now.
Please do plan well to soften the impact.