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5 Things SMEs Have To Keep In Mind About GST

Updated 27 Apr 2015 – By Loanstreet


Now that the Goods and Services Tax (GST) has been implemented in Malaysia, it will have a large impact on small and medium enterprises (SMEs), of which make up most of the business establishments in Malaysia. Under the Goods and Services Tax Act 2014, any business with annual sales turnover more than RM500,000 must register with the Royal Malaysian Customs Department (RMCD). While the mandatory GST registration does not applies to businesses with annual sales turnover less than RM500,000, they may still voluntarily register for GST with Customs.

But registering with Customs is only the first step in GST compliance. Over the coming months, SMEs will definitely face challenges in implementing the new tax system. So what else must every SME do to be GST compliant?

Here, we have summarized into 5 key points for SMEs to remember.

1. Timely and Proper Accounting

SMEs must keep proper accounting records or face the risk of being fined by RMCD.

With GST, your accounting records need to be updated on monthly or quarterly basis.

The GST return must be submitted to the GST office not later than the last day of the following month after the end of the taxable period. The taxable period is a regular interval period where a taxable person is liable to account and pay to the RMCD on his GST liability.

All business and accounting records relating to GST transactions have to be kept in Bahasa Melayu or English for a period of seven years.

Tip #1: Make sure to invest in GST-compliant accounting software! This alone can take care of a large part of your compliance headaches.

2. Issuing Valid Tax Invoices

Valid tax invoices MUST be issued for all business transactions on taxable supplies. Valid tax invoices can be in the form of full tax invoice or simplified tax invoice. But generally, they must contain the following information:

  1. The registered name, address, and GST identification number
  2. Date of issuance of the tax invoice
  3. Tax invoice serial number
  4. Description of goods and services supplied, including quantity, amount payable, and type of supply (Zero Rated, Standard Rated, or Exempt Rated)
  5. Any discounts offered
  6. The subtotal excluding GST
  7. GST rate and GST payable amount
  8. Total amount payable including GST

For full guide on issuing tax invoices, please read this document.

Tip #2: If you run a cash business, it is mandatory to use a Point-of-Sales (POS) system moving forward.

3. Claiming refunds

Tax Invoices from suppliers have to be kept properly so that input tax can be claimed from Customs. These tax invoices have to be valid in order for businesses to claim back the GST they have paid on the cost of running business.

Any refund of tax may be offset against other unpaid GST, customs and excise duties. Refunds will be made to the claimant within 14 working days if the GST Return is submitted online or 28 working days if the GST Return is submitted manually.

Tip #3: Are you aware that input tax claimable for a single simplified tax invoice is limited to only RM30? If you wish to claim more than RM30 input tax from a purchase, you should insist your supplier to issue a full tax invoice.

4. Penalties 

The responsibility of being GST compliant falls on businesses. Penalties may be imposed on businesses for failing to comply. The key punishable offences to take note of are:

  1. If there is any deficiency on the net tax payable
  2. GST Return is not submitted or late submission
  3. A GST return is submitted without payment or lesser payment
  4. Any refund paid to which there is no proper entitlement.

Tip #4: It’s advisable to submit the GST Return much earlier than the due date and ensure that you have sufficient fund to pay GST on the due date.

5. Reviews are allowed

Businesses can apply for review and revision to the Customs’ Director General within 30 days from the date of notification on offence charged by GST officer. Alternatively, businesses are allowed to make an appeal to the Tribunal within 30 days from the date of the offence charged.

The appeal case can be represented by the taxpayer and the hearing shall be conducted in a private proceeding unless both parties agree to an open court.

Tip #5: Please get advice from your GST Tax Consultant before applying for review and revision.

Conclusion

Every business, whether big or small will face teething problems in relation to GST in the next few months. But fear not! The transition is only once off. During this period, it is advisable for all SMEs to join GST training programmes or seminars and engage GST experts to help make the transition into a GST ready business as stress-free as possible!

This article was written in collaboration with YYC Advisors. YYC is a leading Malaysian group of professional chartered accountants, tax specialists and GST/business consultants committed in advising and assisting Malaysian businesses’ growth.. They provide GST Trainings and GST Support Services for businesses gearing up for GST with the enviable reputation of breaking down complex information into simple and easily understandable pieces for a better understanding of the GST issues at hand. For more information, please refer to YYC Advisors

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