Businesses still facing pricing, operational issues as GST looms

KUALA LUMPUR: The Goods and Services Tax (GST) is due to be implemented in about six months but businesses are still grappling with pricing issues and operational challenges due to the ambiguities related compliance costs and terms which affect cashflow.
"What we really hope for Customs to be able to do is while they are hearing the cry out from businesses, while they are hearing the wishes from businesses in terms of how they should be treated, a firm decision must be made so that businesses are certain about what they have to do, like it or not," PricewaterhouseCoopers (PwC) Taxation Services Malaysia executive director Hanita Ahmad told reporters at a briefing on GST yesterday.
Although Customs has taken steps to provide guidelines and parameters to ease the transition to GST, there are still certain gaps that need to be addressed with key issues including identifying which products fall under the GST ambit, how to avoid double taxation for stock that is still on hand on March 31, 2015 and how to treat products that are billed in advanced.
The government announced that sales tax will be returned for stock on hand as of March 31, 2015 but because many businesses operate on credit terms, it is not certain whether they will need to pay the supplier for such products by this date in order to qualify for the refund.
Businesses that issue invoices in advance also face a challenge as the GST can only be imposed after April 1, 2015. In this case, businesses need to be assured that they can charge GST for goods and services provided after April 1, 2015.
"While the law appears to allow (this), there's no clarity in terms of how we are going to operationalise this post April 2015. If you imagine, if I get the service in May for example, I already paid for the transaction in January and got the invoice in January, there's no GST very naturally. But I know there is GST so in May, I want to be able to claim an input tax back on that. So I want government to tell me, can I do it? Can I take it? How do I take it without having a GST invoice on that? That's one of the uncertainties for businesses," said Hanita.
She added that the current Customs guides are also not updated to be in line with the legislation and businesses face a tight deadline as they need six months ideally, to test their systems; thus businesses need their systems to be GST-ready by end of October.
Businesses may also attempt to widen margins as contingency against uncertainty in order to compensate for any possible shortfall.
"If everything is firmed up by December, there is no reason for people to unnecessarily increase the margin. You can't go around and say it is uncertain anymore," she said.
"The law is sometimes worded in such a way that its quite restrictive. Government or Customs have intended to give some concession which we are very thankful about. What we wish is that once a concession is given, stick to the concession. If you want to take away the concession, it must always go forward, shouldn't go backwards," she added.