Preparing For Malaysian GST Helping you get a head start on GST compliance GST is Complex GST is complex because it is a multi-stage tax, collected at every stage of the production and distribution chain when the purchase or sales of goods and services are involved. As a business owner, it is imperative to determine correctly what GST processes best suit your business to maximise input tax credit, and avoid penalties. Malaysia GST System at a Glance s Quick Facts s Compulsory for businesses with annual turnover of > RM500,000 1 APR 2015 s Types of Supplies Taxable Supplies Standard Rated Supply Zero-Rated Supply Non-Taxable Supplies Exempt Supply Out-of-Scope Supply Depending on the nature of your business, you will have to charge GST on different supplies. The key is to determine which of your supplies are subject to GST, and which are not. GST Has Far-Reaching Implications Producer A Producer B s Pay net GST to Customs / Claim GST Refund from Customs Getting a head start in familiarising yourself with the concepts and principles of GST is crucial as it has significant impact on your tax filing. It would be wise to start realigning your business and resources now, so you can hit the ground running when GST is officially implemented. Your supplier charges you 6% input GST on goods & services Business Owner Output Tax Input Tax = Net GST Payable s Pay net GST to Customs Distributor/ Retailer You charge 6% output GST on goods & services Input Tax Output Tax = Net GST Refundable s Pay net GST to Customs / Claim GST Refund from Customs s Claim GST Refund from Customs Royal Malaysian Customs Producer B Benefits of GST Compliance Producer A Some examples of Non-GST Compliance Deliberately fail to register for GST Late filing of GST returns Over-claim input tax Under-declare net GST payable Claim back input tax (where applicable) Reduce cost of doing business A responsible business owner For the betterment of the nation Commit offences / Incur penalties Fine Potential prosecution and imprisonment Or both footnote: GST Compliance Non-GST Compliance Reap the benefits of being GST compliant Impact of GST on Business Functions Many perceive that understanding GST is the sole responsibility of the finance department, which is not true. It is imperative that all departments in the business understand the concepts and principles behind GST, and how it affects the respective functions of the business. The range of what is and what is not taxable under the GST is overwhelming. Identifying and planning for the onset of GST and aligning all your business functions to be GST compliant is a challenging task. As a business owner, you need to put in place a system and sufficient human capital to ensure the smooth transition to total compliance. Examples of Issues Faced by Various Business Departments Accounting System: IT Hardware & Software Accurate capture of GST info Education & Training • GST compliant system Integrated with each department and ready to handle transactions, whether these are affected by GST or not Scalability when the business grows and/or diversifies • Human Resource Finance & Admin Educate and train employees to make good GST decisions on behalf of their respective departments • Optimise employee benefits (maximise input tax for benefits provided) • Cash flow impact and optimisation Develop skills to minimise GST impact • GST efficiency on remuneration package • Amendment of documents • Minimisation of compliance costs • Maximisation of input tax claims • Obtain appropriate registration • Prepare for implementation date • Apply for appropriate special scheme Data conversion from old to new system system RM Legal Marketing & Sales Purchasing Corporate strategy • Drafting and amendments of contracts • Effect on prices • Vendor selection • Structuring of GST-efficient deals • Renewal of contracts in line with GST implementation • Price strategies • GST-efficient corporate structure • Inclusion of tax clauses • GST-efficient sales promotion • Efficient procurement strategy to minimise irrecoverable input tax • GST rates for different goods & services • Maximise input tax claim • Minimise GST compliance costs • Tracking of contracts for transitional issues GST impacts all areas of operations. Our advice to business owners is to prepare early by aligning your resources to be GST compliant, ensuring a better position in which you can make sound business decisions that will benefit the entire organisation once GST takes effect. Crowe Horwath Can Help You Understand the Implications of GST At Crowe Horwath, your business is our focus. Our dedicated team of GST experts can help you craft a tailored GST implementation solution based on your unique business needs, whilst minimising impact and interruptions to your day-to-day operations. From staff training and project management to periodic health checks to ensure compliance, we work with you every step of the way as you get ready for the onset of GST in April 2015. Our Expertise • Identify and analyse key areas affected by GST • Conduct transactional analysis • Advice on how to maximise operational and tax efficiency • Methods to minimise compliance costs • Advice on mitigating adverse effects on profit and cash flow Our Suggested Timeline Phase 1 Pre-GST (Approximately 2-3 months) Phase 2 Pre-Implementation (Approximately 3-6 months) Phase 3 Objective: Identify all functions that will be impacted by GST, and train employees to maximise input tax claim. Objective: Prepare the platform to ensure smooth transition to total GST compliance. Objective: Refine approaches to maximise benefits and minimise compliance costs. • Educate and train your employees about GST • Form a project team to address all matters in relation to GST • Conduct pre-GST implementation study • Conduct transaction analysis and impact studies • Conduct operational and business review • Review past and current contracts and documentation • Review of strategic issues • Conduct gap analysis • Advice on system modification Internal controls Common errors System features • Advice on contracts and documentation modifications • Draw up GST manual and provide training • Advice on price setting • Liaise with Royal Malaysian Customs • Implement systems trial run • Assist with GST registration • Advice on transitional issues Post-GST (within 2 months of implementation) • Submission of GST returns • Liaise with Royal Malaysian Customs on payments or refunds of GST • GST health check Our Team in Kuala Lumpur Office Crowe Horwath has 12 offices across Malaysia, headed by partners with expertise in taxation and GST planning. For more information, please contact the individual offices as per below. Poon Yew Hoe Fennie Lim Nickson Choo Mananging Partner Crowe Horwath Malaysia Tax Executive Director Crowe Horwath Malaysia Director Crowe Horwath Malaysia GST Experience: GST Experience: GST Experience: • Advised & implemented GST projects in Cambodia & Malaysia since 2005 • Advised & implemented GST projects since 2005 • Completed full GST course conducted by Royal Malaysian Customs • Completed full GST course conducted by Royal Malaysian Customs • Completed full GST course conducted by Royal Malaysian Customs • Accumulated experience dealing with GST in Australia, Singapore & Cambodia • Accumulated experience dealing with GST in Australia & Singapore Wong Man Yee Jonathan Doy Chan Wai Choong Associate Director Crowe Horwath Malaysia GST Partner Crowe Horwath Australia GST Executive Director Crowe Horwath Australia GST Experience: GST Experience GST Experience: • First person to be made equity partner at a Big Four firm when GST was first implemented in Australia • Advised & implemented GST projects since 1998 • Completed full GST course conducted by Royal Malaysian Customs • Accumulated experience dealing with GST in Australia & Singapore • Contributed to the development of GST laws, and the interpretation and practice of GST law especially in the fields of property, retail, health, and public sectors • Previously served as GST Director in a Big Four firm prior to joining Crowe Horwath • Familiar with UK VAT system, having worked there for 3 years • Sucessfully resolved multi million dollars ATO disputes and refund matters for his clients Our Partners in Other States Michael Ong Ng Kim Kiat Christabel Chieng Principal Crowe Horwath Klang Partner Crowe Horwath Muar Partner Crowe Horwath Labuan Patrick Wong Eddie Wee Chai Tze Chek Partner Crowe Horwath Melaka and Johor Bahru Partner Crowe Horwath Kuching (Brighton Square) Partner Crowe Horwath Kuching (Petanak) Eddy Chan Michael Tong Matthew Wong Partner Crowe Horwath Penang Senior Partner Crowe Horwath Kota Kinabalu Partner Crowe Horwath Miri Lau Hin Siang David Lau Partner Crowe Horwath Bintulu Partner Crowe Horwath Sibu Chai Voon Huei voonhuei.chai Amanda Lim amanda.lim Siow Kwi Fong kwifong.siow , , 2 900 191 80 18
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