ACCCIM Survey Report on the GST Implementation in Malaysia
1. Malaysia has implemented the Goods and Services Tax (GST) with effect from 1st April 2015. Since then, the business community and the public have been encountering with several issues and problems.
2. The survey was conducted during the period of 20th June 2015 to 31st July 2015. A total of 2,000 survey questionnaires were distributed, with 963 returns received. The response rate is 48.15%.
3. The survey was conducted mainly through ACCCIM’s 17 constituent chambers located throughout Malaysia in 13 states and participated by other national level chambers of commerce, trade and sectorial organisations such as textile manufacturing, shopping malls, construction and building materials, sundry goods merchants, retailers, knitting manufacturing, hoteliers etc. The survey findings reflect the collective views of industries and businesses irrespective of ethnic group.
4. In term of the geographical distribution of the responded entities, of which 30% are from Southern Region (Johor, Melaka), followed by Northern Region (Perlis, Kedah, Penang and Perak) and Central Region (Kuala Lumpur, Selangor & Negeri Sembilan) which contributed 27% and 26% respectively.
5. Out of the 963 respondents, 34% are in Wholesale and Trading businesses, followed by 21% in Manufacturing and 10% in Professional services.
A. Goods and Services Tax (GST) Implementation
6. 43% of the respondents indicated that GST implementation has brought adverse impact to their companies, whereas 30% revealed that there is a positive effect on their businesses.
7. The industries that suffer highest negative impact by the implementation of GST are Logistics (59%), Property Development (51%) and Imports & Exports (50%).
8. As high as 87% of the respondents are GST registrants that where their taxable turnover have exceeded the threshold of RM500,000 per annum.
9. In terms of investment in both hardware and software for the preparation of the GST implementation, almost one third (1/3) of the respondents (32%) was between RM10,000 to less than RM50,000. This inevitably did increase the cost of doing business. The industry that made a huge investment is the hospitality businesses with 42% of the respondents indicated their investment is more than RM50,000.
10. Slightly more than half (52%) of the respondents utilized the GST e-Voucher worth RM1,000 offered by the Government for SMEs to purchase/ upgrade GST accounting software. This indicates that the e-Voucher of RM1,000 per SME is not cost-beneficial or effective to assist the SME in alleviating the cost of implementing GST.
11. Although there are 68% of respondents attended workshops or training courses provided by Royal Malaysian Customs as mentioned above, but many questions and doubts remain unanswered..
12. Since the GST took effect on 1st April 2015, 63% of the respondents indicated that they are having problems to operate the GST software, whilst 61% facing cash flow problems. Another major issue is the refusal to pay GST where 32% of the respondents facing the problem of their clients/customers refusing to pay GST on their purchases.
13. The results of the survey shows that 86% of respondents is currently using computer generated invoice, where 3% of the respondents indicate that they are still using entirely handwritten invoice.
14. Majority of respondents (70%) did seek for consultation from Customs either by calling the GST Hotline or through GST Portal. However, only 22% of the respondents indicated that their problems are being resolved. ICT is the industry with most problems remains unresolved (41%), followed by Foods & Beverages (38%) and Logistics (38%).
15. Only 5% adjusted the price downwards after the implementation of GST.
16. Only 15% of the respondents are on cash term basis, majority from the Foods & Beverages industry. Businesses that are required to extend longer credit terms for above six (6) months are Agriculture, Timber, Fishery, Farming & Gardening, and Wholesale & Retail sector.
B. Anti-Profiteering
17. More than half (51%) of the respondents stated that they are not aware of the price control law.
18. The results of the survey show that a whopping 84% of respondents complained that they do not understand the Net Profit Margin calculation formula provided in the “Price Control and Anti-Profiteering Act 2011”.
19. The survey found that the five major constraints faced by the businessmen while calculating the profiteering formula as follow:i. The determination of the margin for every product category (23%), ii. In certain exceptional cases, i.e. due to promotional discounts or damaged inventory that will affect the calculation of the net profit margin (19%), iii. The calculation of the selling price adjustment due to the increase in the cost during the annual timeline as it is customary to increase price every year to cater for pay rise, increase in price-level changes irrespective of GST implementation (19%). iv. The determination of Net Profit Margin (NPM) (18%), andv. What constitutes operating costs (18%).
C. GST and Anti-Profiteering Enforcement
20. More than half (53%) of the respondents do not agree with the use of MDTCC or RMC officers to act as mystery shoppers to nab errant businessmen or traders.
21. 9% of the respondents indicated that officers from the Royal Malaysian Customs and MDTCC have been inspecting their companies. 88% of them stated that these officers acted professionally, and they have provided clear answers to the enquiries made by the businessmen on-site visit, indicating that hand holding programme are valued by the business community.
22. Amongst this 9% of respondents being inspected, 14% revealed that they received notices to provide information or explanation to these authorities or summons from the Royal Malaysian Customs or MDTCC.
