Thursday, 21 June 2018

World cup fever: How HR can keep staff in check

Author: Nurhuda Syed

This story originally appeared here: www.hrdmag.com.sg

With the 2018 FIFA World Cup set to kick off in Russia on Thursday (14 June), football fans in Singapore are gearing up for late nights at the local waterhole to root for their favourite teams.

Luckily for those who have to make their way to the office the next day, the favourable time difference between the two countries will not disrupt much of their sleep — with most matches taking place between 6 pm and midnight. Only about a fifth of the 64 games will air at 2 am Singapore time.

Regardless, employers may still face with a slip in discipline from some staff, so HRD got in touch with employment lawyers from Clyde & Co, Chris Holme, partner, and Corinna Harris, professional support lawyer, for a guide on handling possible issues from ardent sports fans.

Requests for time off

C&C: Inevitably during major sporting events, employers can receive a higher number of holiday requests. These should be dealt with in the normal way — on a first come, first served basis.
Employers should treat each request in the same way, without giving preference to some requests over others, as this could be deemed discriminatory.

A rise in absenteeism

C&C: Employers should not automatically assume that absence on the day of, or the day after, a big match is not genuine.

Before deciding whether disciplinary action is appropriate, employers should investigate the particular circumstances (including the employee’s explanation and any evidence for the absence, such as a doctor’s note).

Absenteeism is less likely if employees are made aware that absences are monitored and that unauthorised absence may lead to disciplinary action. At the same time, employees may not take non-genuine sickness absence if they are shown a degree of flexibility — such as allowing them to follow matches at work to some extent, or to leave work earlier and make up the time.

Working shorter days

C&C: The morning after the night before: what if employees come in late the day after a World Cup match?
Employers may decide not to take a strict approach, especially if the employee regularly works longer hours than required. But in other circumstances, employers may take action in the usual way, initially by speaking to the employee on an informal basis and then taking more formal action if this reoccurs.

Watching matches at work

C&C: If employees are allowed to use IT systems to watch or follow World Cup matches during work time, employers should provide guidance on what is permitted.
For example, it should be made clear that any such use must not be excessive and should not interfere with business needs, and whether there are limitations on what can be viewed or downloaded to work systems.

Showing inappropriate behaviour — “football hooligan-ism”

C&C: Healthy banter at work can be beneficial to the business, helping build team spirit and morale. That said, there is a risk of harassment or discrimination where rivalries create a hostile, degrading or intimidating working environment and if that happens, employers should take appropriate action.
Employers may consider taking positive steps to remind employees that such behaviour may lead to disciplinary action.

If employees are intoxicated at work, it will normally be appropriate to suspend them immediately. An investigation into their conduct should be carried out, which might include identifying whether there are any underlying reasons for this (such as alcoholism), before taking any disciplinary action.

If the inappropriate behaviour takes place outside work, employers should not assume that this will automatically lead to disciplinary action. It will usually depend whether the behaviour has any connection with the employee’s work and the extent to which it may bring the organisation into disrepute, taking into account the employee’s role and their behaviour.

Tuesday, 19 June 2018

Revenue increase in Malaysia 2018

Dave Ananth is a senior lawyer, a former Magistrate and advocate in Malaysia before taking up a position with the Inland Revenue Department in New Zealand as a Prosecutor. He now practises as a Tax Barrister, based in Auckland. He is an expert in taxation and tax policy. He also writes extensively on direct and indirect tax issues in Malaysia and New Zealand.  He is a consultant for Wolters Kluwer Malaysia. He can be reached at davetaxnz@gmail.com.




Taxes are the backbone of any government. It is important for a country to develop a stable tax policy that can withstand pressure and deliver revenue, especially during times of global uncertainty.

Malaysia has successfully diversified its economy from one that was initially agriculture and commodity-based, to now include robust manufacturing and services sectors. However, her economy is still reliant on agriculture and commodity-based industries. For example, Malaysia exported RM158.72 billion (17% of total exports) worth of mining and agriculture goods in 2017.[1] Reliance on such industries are inherently risky as commodity prices can be uncertain, due to external factors such as currency fluctuation, political and global demand.

Therefore, the focus should be on strengthening revenue collection and broadening revenue base without disrupting the lives of local residents and containing inflation.

With the removal of GST, the government stands to lose about RM44 billion per year, based on 2017 figures. The government estimates that with the implementation of SST, it stands to earn about RM4 billion[2] in 2018, and RM30 billion[3] in a calendar year.

The Finance Ministry has announced that federal government debt has exceeded RM1 trillion. It has identified RM10 billion of expenditure cuts, which includes downsizing, delaying or cancelling expensive projects and non-urgent spending. These measures will no doubt help, however, they are short-term. What the government needs to look at is creating tax policies that remain competitive and promote sustainable revenue increase.  

The focus of Malaysia’s revenue policies should be on identifying approaches to increase revenue by leveraging on existing opportunities rather than relying on products such as timber, oil and gas which are subject to market conditions.

Below are several options that the government may consider to increase its revenue collection.

Luxury tax

Luxury tax is a tax imposed on products or services that are deemed to be non-essential. Generally, it is a transactional tax, imposed on the consumer who purchases or uses the good or service. Luxury tax is usually associated with products enjoyed by the ultra-wealthy such as private jet plans, expensive jewelry and cars like Ferraris, Rolls Royce, etc. The administration of this tax could be placed under the Royal Malaysian Customs Department (RMCD). The RMCD shall determine the type of products that are considered “luxury” for tax purposes. However, the list of such products need to be reviewed over time, especially if Malaysia moves towards becoming a high-income nation.

Regulating charity services

The Registry of Societies Malaysia (ROS) is responsible for monitoring all societies in Malaysia, which includes non-profit organisations and charities. However, although most of the established charities operate in accordance with the law [especially if they are approved organisations under s 44(6) of the Income Tax Act 1967], there are small-scale, independent charities that operate with minimal supervision. As such, there may be a lack of control and transparency on how some charities are run, especially when it comes to fundraising.

A Charities Commission could be set up as a monitoring body under the ROS to govern the activities of charities in Malaysia. Its roles could include:

1. Regulating financing and fundraising activities of charities.
2. Ensuring that charities provide truthful information on their activities and expenditure.
3. Monitoring charities to ensure that there are no tax abuses.

The Charities Commission should work closely with the ROS and Inland Revenue Board (IRB) to ensure that there are no tax fraud/abuse of financing for personal gain. Their activities will assist in promoting public trust and confidence in the charitable sector domestically and internationally as it will bring about good governance and transparency among charitable organisations.[4]

Compulsory tax number for ALL

Rather than imposing new direct taxes, the Government could focus on enforcing tax compliance among the existing income-earning population in Malaysia.

To do so, the government could consider imposing a requirement where residents and non-residents who open bank accounts in Malaysia must register with the IRB and obtain an income tax number. Having an income tax number would enlarge the pool of potential taxpayers under the IRB’s purview. This should make it easier for the IRB to monitor taxpayers’ activities and determine if they would be liable to tax.

This allows the establishment of a stronger paper trail as there will be communications between the IRB and the banks via Bank Negara Malaysia (BNM). Apart from that, banks are required to report any suspicious transactions to BNM which should allow IRB to act quickly on any possible tax evasion cases.
 
Increase timber premium and/or mining royalty

The government can take advantage of the low value of the ringgit. As it has made Malaysian goods cheaper overseas, this could possibly lead to an increase in foreign demand for such goods. Currently, state governments impose timber premium and/or mining royalties. In 2017, Sarawak increased its hill timber premium from RM0.80 to RM50 per metric meter of logs harvested.[5] As such, other state governments can consider increasing its timber premium and/or mining royalties.

Tax on “worldwide income” for individual residents

Income tax in Malaysia is imposed on income accruing in or derived from Malaysia except for residents engaged in banking, air and shipping enterprises, which are taxed on a worldwide basis.

Malaysia could consider shifting to the worldwide taxation system to increase its revenue, where individual taxpayers are taxable on their worldwide income regardless of where the income is derived. For example, Malaysians who are working or doing business abroad, but with families staying in Malaysia, should be liable for tax in Malaysia.

New Zealand is an example of country that taxes its individual residents on their global income.

Taxing foreign workers

As a rule, there is no tax for those with income less than RM5,000 per month. However, this privilege is also enjoyed by all foreign workers who fulfill the tax residency rules.

As they also benefit from the use of Malaysian facilities (e.g., public amenities), foreign workers who earn above RM2,000 or RM3,000 should be subject to Malaysian taxes. Subject to a comprehensive study, a flat rate tax of, say 2% to 5%, could be imposed on these individuals.

Tax on money transfer using non-banking facilities (eg Western Union)

In Malaysia, there are no taxes imposed on remittances overseas. Tax is only imposed on the fee charged by the remittance company. However, with GST abolished in Malaysia, no tax will be imposed on remittance transactions. At time of writing, it is unclear whether service tax under the SST regime will be imposed on such services.

The government can consider imposing a tax of RM5 for remittance below RM1,000 and RM10 for remittance above RM1,000, per transaction. By doing so, the government could gain some revenue from the outflow of money.

There is an estimated 1.7 million legal foreign workers in Malaysia as of 30 June 2017.[6] By merely taxing the legal foreign workers would yield a revenue of at least RM8 million, i.e. 1.7 million x RM5 = RM8.5 million. By imposing a tax on the money transfer, this could possibly act as a catalyst to the legalisation of illegal foreign workers.

The implementation of revenue policies must be strategic and aligned to the government’s fiscal development plans. The abovementioned methods will bring in additional revenue, however, there are other factors to consider – compatibility with the Malaysian taxation policy and socio-economic issues, etc. – before any implementation is done.




[1] Anon., 2017. Components of Malaysia's Exports 2017. [Online]
Available at: http://www.matrade.gov.my/en/28-malaysian-exporters/trade-statistics/3793-components-of-malaysias-exports-2017
[Accessed 11 June 2018].
[2] Amarthalingam, S., 2018. RM21b GST revenue loss to be plugged. [Online]
Available at: http://www.theedgemarkets.com/article/rm21b-gst-revenue-loss-be-plugged
[Accessed 11 June 2018].
[3] Hassan, H., 2018. Malaysia keeps deficit goal despite GST removal. [Online]
Available at: https://www.straitstimes.com/asia/se-asia/malaysia-keeps-deficit-goal-despite-gst-removal
[Accessed 11 June 2018].
[4] For further reading on the governance of charities, please see “Not all charities are honourable and honest”.
[5] T.W., R., 2017. Sarawak to raise tax on hill timber by more than 6,000%. [Online]
Available at: http://www.freemalaysiatoday.com/category/nation/2017/05/09/sarawak-to-raise-tax-on-hill-timber-by-more-than-6000/
[Accessed 14 June 2018].
[6] Nasa, A., 2017. More than 1.7 million foreign workers in Malaysia; majority from Indonesia. [Online]
Available at: https://www.nst.com.my/news/nation/2017/07/261418/more-17-million-foreign-workers-malaysia-majority-indonesia
[Accessed 14 June 2018].

Monday, 11 June 2018

Pictorial Employment Contracts — a legitimate craze, or just plain crazy?


Author: Stephen Booth (Coleman Greig)





Now here’s a new idea: the pictorial employment contract.
As part of its focus on innovation, global engineering and advisory company Aurecon is introducing a visual employment contract, effectively eliminating the bulk of the text from their employment contracts by using pictures to accompany the contract’s wording. As reported in the Australian Financial Review, this is the first time that an Australian company has introduced this type of visual employment contract.

The drive behind utilising the visual contract is to make the document as accessible and understandable as possible for those involved in the employment process. Aurecon is also hoping that the introduction of this new type of contract will result in a focus on the day-to-day relationships between the company and their employees, rather than creating an overload of threatening (and for some, difficult to understand) legal text.

Friday, 1 June 2018

The Sun Sets on GST

GST and the transition to SST

Goods and Services Tax (GST) came into effect in Malaysia on 1 April 2015, replacing the Sales Tax and Services Tax (SST) regime. Touted as an all-encompassing tool that has a wider tax base as well as being transparent and efficient, GST brought in RM44b to the government coffers in 2017. This enabled the narrowing of the fiscal deficit.

The introduction of GST coupled with external factors brought about increased prices of goods and services, even the essential ones. Compliance cost and disproportionate price increases contributed to the negative perception of GST.

Thursday, 24 May 2018

The final 15 days of GST: FAQ

By Tratax - Thenesh, Renga & Associates.
This article was first published in in Tratax’s Tax e-Alert, 17 May 2018.

Q1: For purchases made in May, will I be entitled to claim input tax credit on the stock-in-hand as at 31st May 2018?
A1: Section 39 of GST Act grants credit in respect of input tax that is attributable made or to be made by the business. There is no need for the acquirer to make an onward taxable supply in the same taxable period. Any supply made in June is subject to zero GST, but is nevertheless a taxable supply. Hence, the entitlement for input tax credit in May 2018 (or earlier) pursuant to the normal mechanism of GST should not be disturbed.

Q2: Can a business continue to issue tax invoice after 31st May 2018?
A2: The business may issue “tax invoice” or “invoice” (or any equivalent document). However, no tax shall be charged on any tax invoice issued after 1st June 2018; given that section 33(10) of the GST Act stipulates that it is an offence to issue tax invoice with 6 percent GST on any zero-rated item.

Tuesday, 22 May 2018

GST to SST: Is it a simple journey?


By Thenesh Kannaa, a licensed GST Agent and author of Master GST Guide.
This article was first published in Tratax - Thenesh, Renga & Associates’ Facebook page, 11 May 2018.


The leaders of the present government have expressed commitment to abolish Goods and Services Tax (hereinafter “GST”), which was implemented effective 1st April 2015. Although no fixed dates have been announced, the momentum suggest that this would be sooner than later.

I firmly believe that enforcement bodies and the GST agents licensed by the government must assist in the implementation of the government’s policy, despite any differing views that one may have. There are many nitty-gritties involved in the process of dismantling GST. There are many potential technical issues which requires involvement of GST experts. Yes, that’s right - GST cannot be effectively dismantled without participation of accountants and GST agents.

The accountants and GST agents who passionately implemented GST in 2015 should now express the same passion to ensure the process of dismantling GST in 2018 is an effective one. Some may ask – “What is so difficult? – just revoke the GST Act la!”. Well, ponder upon the following ten matters.

Tuesday, 15 May 2018

Workplace discrimination


Authors: Donovan Cheah (Partner) and Adryenne Lim (Legal Executive) (Donovan & Ho)


In response to the news concerning the ban on wearing tudung imposed by hotel owners on employees, proposals to amend the Employment Act 1955 were put forward by the Human Resources Ministry to address, among others, the issue of workplace discrimination. The ban had rightfully sparked debate about the issue of workplace discrimination, and the proposal for amendment was certainly a much needed move to fill in the gaps of our existing laws.

Unfortunately, due to the recent dissolution of parliament, any amendments to the law will have to be shelved for the time being. While there is not yet any specific legislation to tackle the issue, can individuals nonetheless rely on existing laws for protection? Where does the law currently stand in terms of protection against discriminatory practices in the workplace?

Where we are right now?