GST : Impact and Why?
GST is meant to replace the current consumption tax i.e. the sales tax and service tax (SST), to enhance the efficiency and effectiveness of the existing taxation system in Malaysia which is more effective, efficient, transparent and business friendly to collect sufficient tax for the country.
GST comes with comprehensive tools and steps to safeguard its purpose. Let's see
a) GST compliance software
is making the wave inside every taxpayer business system and dig every piece of information from the daily transaction and ledgers to be submitted online shown as GAF below stated in "GUIDE TO ENCHANCE YOUR ACCOUNTING SOFTWARE TO BE GST COMPLIANCE"
b) Speed up Income Tax Audit
Cross checking by Income Tax department would be much easier and faster since documentation is properly done for custom tax.
c) Eight (8) types of audit
to ready to challenge tough taxpayer.
i) Desk audit - checking and verifying information on GST return
ii) Refund audit - verifying refund claim
iii) Transaction audit - verify transaction exist and correctly complied and reported
iv) Advisory audit - provide advisory GST education encourage voluntary compliance
v) Compliance audit - comprehensive audit conduct on all transaction
vi) Cancellation audit - comprehensive audit all transaction before any cancel GST registration
vii) Special audit - determined by DG
viii) Large Taxpayer Unit (LTU) Audit - ensure their full compliance to GST legislations.
d) Penalty for late GST registration and late submission
which provide extra collection for tax
e) Making Business people care about their monthly accounts or quarterly accounts
Accounts records need to updated as frequent as possible and finalized
f) Bill Tax Invoices within 21 days
No delay or excuse for negotiating pricing
g) Clear information on Credit Note
Putting Tax Invoice No, with reason
h) To maintain profit and stay competitive, please do claim input tax
Without claiming or lazy to claim input tax, business would earn less profit. Custom says within 6 years you are eligible to claim, but why lazy to claim happen at the first place?
i) To maintain competitive, cashflow planning on Debtors, Creditors and Inventories
This is a tricky part, quarterly submission would require more planning than monthly submission due to its accumulate 3 months GST payment and especially import transaction. Keeping non common inventories would drag business cashflow for quite some time, while payment made to custom is prompt payment.
j) Straight forward estimation of 6% Gross Profit Margin from Income Statement, but the profit is remain in the business.
Cost RM 30, Selling RM40, Profit RM10.00, Custom Get RM0.00 for those business without SST
with GST 6% inclusive, without changing cost and selling price.
Purchase RM31.80, Selling RM42.40, Profit RM10.00, Custom Get RM0.60
Here is the workout :
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) : RM2.40 (pay output tax) - RM1.80 (claim input tax)
k) 100% Directors or Business Owner responsibility
Getting Directors and Business owners to really really manage their business well. Any outstanding issue such as payment to custom or income tax, would put overseas travel on hold.
l) Provide job for quality staff and how to maintain them
Provide better job and salary for those qualified and ICT industries here to assist custom.
m) Single Taxable Person
This specific term used in GST to avoid artificially separate their business activities for the purpose of tax avoidance, perhaps it also meant for avoiding GST registration. Kindly consult your Tax person for more information.
n) Strict rules to those increase Pricing
There are to believe that there are slightly price increase in goods generally, however strict rules would be applied to those increase price higher than the shopping list that would be given on January 2015. This list definitely draw a line between able to make a profit or not and for withdrawing out some of the product on shelf if the price is incompatible to the market. Or else consumer has right to report their dissatisfaction.
All of the above is provided as a guideline only. Those who care about GST would work and sit down together with those who care about their business.