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Looking At The Silver Lining

Looking at the Silver Lining
GST Implementation will lead to many benefits for the SME Community, beyond the perceived challenges and misconceptions.

The phrase ‘every cloud has a silver lining’ cannot be more apt in a situation where we all have our own questionable and sometimes skeptic interpretations of the world of business and post implementation of the impending Goods and Services Tax (GST) beginning 1 April 2015. On the contrary, GST, replacing the current Sales and Service Tax (SST), will prove to be a boon for the SMEs in terms of reduced costs of business supplies including capital assets, improved export competitiveness and better governance that will provide you with a business advantage. The ‘silver lining’, would be the tireless efforts of the Government to achieve some degree of GST-preparedness through training, grants and incentives to make the transition for the SMEs more seamless.

All said and done, each one of us might want to take a step back and gain a perspective on one of the most basic of questions - What has been the strategy or the thinking behind GST adoption and implementation? The implementation of GST in itself is a strategy to sustain our economy and strengthen the nation’s fiscal position by increasing Government’s revenue and decreasing the country’s dependence on international funds. For many companies, including the SMEs, in addition to the benefits, the sweetener is that once they become GST-registered suppliers, they will be entitled to claim the GST levied on the raw materials or inputs used in manufacturing the taxable supplies or goods. To put it simply, the GST implementation will ease a lot of financial burden on companies as it replaces the combined 16% Sales & Services tax imposed currently with a GST standard rate of only 6%. And in case we miss the point, it is only made mandatory on companies with sales turnover more than RM500, 000.00. Those companies with sales turnover below RM500, 000.00 can voluntarily adopt and implement GST if they so wishes to do so.

As in the sales and services tax imposed currently, GST will be applicable on all goods and services supplied in the country or imported, at all stages of production, manufacturing, wholesale and retail activities. GST that is imposed on all business inputs such as raw materials and capital assets is called input tax and the eligible businesses can fully claim back the amount from the Government as input tax credits.

Research suggests that the concept and implementation of GST has proven itself to be an effective, more transparent and business-friendly tax in over 160 countries worldwide including the European Union and Asian countries such as Singapore. Todate, Malaysia joins countries like Myanmar and Brunei (absence of a tax structure in the country) that have not implemented GST. Those 160 countries that had already implemented GST, must also have had their own set of challenges and teething problems when shifting from their respective tax regimes. In making sure there is a smooth transition to the GST structure, the role of the Government, becomes extremely important in ensuring that the critical mass of SMEs or the industry that would be most impacted by newly introduced policy, are cushioned or well supported to not just understand but also seek optimum benefits therefrom.

The Government has recently embarked on a major initiative that will help SMEs embrace the process of GST implementation with positive disposition. In providing financial assistance to the SMEs relating to the GST implementation, the Ministry of Finance (MOF) has appointed SME Corp. Malaysia as the implementing agency to channel the GST financial assistance to SMEs, amid synergistic partnership with the Royal Malaysian Customs Department (RMCD) and the Inland Revenue Board.

In this regard, the Malaysian Government under the Ministry of Finance has allocated RM150 million in financial assistance to our SMEs to facilitate their purchase of the GST accounting software between 2014 and 2015. Based on the fund allocated, the Government is targeting total of 150,000 eligible SMEs to benefit from this fund as to encourage the SMEs to adopt accounting systems that are reliable, efficient and GST-compliant.

As announced by our Prime Minister on 4 June 2014, SME Corp. Malaysia is providing the “one-off” assistance to SMEs on a first-come-first-serve basis, in the form of GST eVoucher worth RM1,000. The eVoucer can be used to either purchase new accounting software or upgrade to GST-compliant accounting system from vendors appointed by the RMCD. SMEs can apply for the GST eVouchers online at http://gst-evoucher.smecorp.gov.my. The application for the eVouchers is now open beginning 1 June 2014 to 31 December 31 2014 or until the quota for the eVoucher financial assistance expires.

In order to be eligible to apply for the GST eVouchers, businesses must fulfil the SME definition (effective 1 January 2014); have at least 51% Malaysian equity; and have registered with RMCD online portal 'MyGST', to obtain the MyGST reigistration number. If you are an SME, each MyGST registration number is entitled to only one eVoucher, which is non-transferable. Once the MyGST registration number is obtained, only then can SMEs apply for the eVouchers through SME Corp. Malaysia’s registration portal. Upon receiving the eVouchers, SMEs can then redeem them from any of the 55 accounting software vendors appointed by the RMCD. Each eVoucher that is worth RM1000 can only be redeemed once. The period of eVoucher redemption is valid from 1 June 2014 until 28 February 2015. The appointed software vendors can submit their claims for payment at SME Corp. Malaysia, though their main branches which are registered with the RMCD. The redemption is based on the actual amount of the purchase price or costs incurred to upgrade the software. SMEs that have purchased or upgraded their softwares before 1 June 2014, between the period of 12 March 2014 and 31 May 2014, are also eligible to obtain the financial assistance whereby payment will be made directly to them through the normal claim process. Purchases or upgrades made before the appointment date of the vendors of 12 March 2014 are not eligible for the financial assistance.

For enquiries and assistance, please contact the GST eVoucher Info Line at 03-2775 6006 or email the GST eVoucher Secretariat at This email address is being protected from spambots. You need JavaScript enabled to view it.. You may log on to GST eVoucher Website at http://gst-evoucher.smecorp.gov.my to submit your application or to obtain the list of appointed software vendors. All related GST eVoucher information can also be obtained at SME Corp. Malaysia’s One Referral Centre (ORC) at 03-2775 6000 or its 11 State Offices nationwide or log on to www.smecorp.gov.my. SMEs may submit their applications for the GST eVoucher using computer terminals that are available at the ORC and all State Offices.

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