The Malaysia GST environment continues to evolve, as the Royal
Malaysian Customs Department (RMCD) pushes on in refining its rules, processes
and policies. Budget 2017 saw various amendments to tighten up the GST
Framework, dealing with such matters as the GST treatment with regards to free
zones, the recovery of tax from persons leaving Malaysia, an increase in the
penalty rate for unpaid taxes, and a change in definition on the time of supply
for imported services.
Outside of Budget 2017, one of the more significant developments
in the past year has been the GST Audit Framework document published
June last year by the RMCD. GST audits has been a
hot topic amongst accountants and tax agents of late, especially with the RMCD
identifying 50,000 companies that will be subject to the first phase of GST
audits.
The GST Audit Framework document discusses GST audits in detail,
laying out key information such as the full process of the audit, documents
required, and the rights and responsibilities of the auditee.
One point that Customs was clearly keen to highlight in the
Introduction of the GST Audit Framework was that being selected for an audit does not necessarily
mean the company is not in compliance with the law, but to assist in ensuring
that the company is in full compliance. While this may come as a relief to
some, companies should not be quick to assume that any errors found during the
audit will not be penalised, especially when errors begin to pile up.
Meanwhile, the gazetting of the Finance Act 2017 also saw the
introduction of the controversial sales device which will be integrated
with a company’s Point-of-Sale (POS) system. According to the second
Finance Minister, Datuk Johari Abdul Ghani, one of the reasons for this
initiative was to address the problem of errant traders asking their customers
whether or not they wish to be charged GST. If the reply is no, the traders
will not issue an invoice, thus ensuring that the transaction will not be
recorded in the trader’s GST return, reducing its remittance.
Installing such a device would theoretically help curtail such
practices, by giving the RMCD ‘real-time’ access to information on all sales
made by such a company and the payments received. While the motives appear
sound, there have been questions with regards to its implementation, such as
privacy concerns and effectiveness of capturing the right information.
Regardless of the implementation problems that are likely to
occur, the two initiatives mentioned above are yet more examples of how
determined RMCD is to ensure that no stone is unturned in their pursuit of
optimum collection of GST. Companies must make every effort to be informed and be
ready when the RMCD comes to visit.
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All the above and more is covered in the latest edition
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