Pemudah pitches importance of payroll systems to businesses

PETALING JAYA: More than 40% of local companies still do not have payroll systems to manage their employees’ payment and tax filings, according to Pemudah (Special Task Force to Facilitate Business) member Datuk Chua Tia Guan.
 
A payroll system is a software which organises all the tasks of employee payment and tax filings, including calculating wages, withholding taxes and deductions, printing and delivering cheques and paying employment taxes to the government.
Speaking to reporters after delivering his opening remarks at the “Open Day on the Importance of Payroll Systems” last Friday, Chua said currently less than 50% of small and medium enterprises (SMEs) are using payroll software, noting such companies represent 97% of business establishment in the country.  
“They always think that the (payroll) software is expensive. Basically, it will only cost within the range of RM1,000 to RM3,000. With that one-off investment, they can actually reduce their mistakes and time of doing the preparation for the (tax) returns,” he said.
According to Pemudah’s records, Chua said, SMEs take a long time to prepare their tax returns and forms for the Employees Provident Fund, the Social Security Organisation and the Human Resources Development Fund.
“From our study, this is because they are not using the software system,” he said, noting most of the large companies have applied the payroll system.
Therefore, he said, the “open day” aims to create awareness among businesses, especially SMEs, on the importance of payroll systems, which will raise tax-paying efficiency and lower administrative costs.
However, based on the World Bank Doing Business 2017 report announced recently, Chua said, Malaysia has made it easier to pay taxes by introducing an online system for filing and paying the Goods and Services Tax.
He said now it takes a medium-sized company only nine payments to comply with the tax requirements, from 13 payments in the previous year. noting that Malaysia is placed 23rd out of 190 economies in 2017 report, compared with 22nd out of 189 economies in the previous year.
However, Chua said, there are lot more improvements need to be done in terms of reducing the administrative burden of paying taxes and contributions for companies in paying taxes and mandatory contributions.
He said the task force hopes to increase the usage of payroll systems by businesses to 70% within the next two to three years.
Pemudah was set up seven years ago to address the need for closer collaboration between the public and private sectors to enhance public service delivery and improve Malaysia’s business environment.