Goods and Services Tax Act takes effect from 1 April 2015 onwards in Malaysia. 2 areas would surely give us cause for concern. Firstly it is the complexity of accounting treatments of transactions; and secondly the hefty penalties imposed by the Act.
There are 13 GST Tax Codes for purchases transactions and 10 GST codes for sales transactions. In addition, one has to determine if one’s business falls within the scope of standard rated, zero-rated, out of scope, exempt or partial exempt. New concepts such as reverse charge mechanism, de minis rule, blocked input tax represents challenges to accounting personnel.
The Act itself imposes onerous penalty clauses as well. For example, under section 88, any incorrect return, understate output tax or overstate output tax shall be liable to fine not exceeding RM50,000 or imprisonment for a term not exceed 3 years or both; plus liable to a penalty equal to the amount of tax undercharged.
Therefore, a company has to ensure it has a robust accounting system that is able to handle GST accounting requirements (such as additional data entry field for Royal Malaysian Custom Department Import Forms), proper GST accounting procedures and adequately trained staff to cope with the requirements of the Act.
Our GST accounting team has been gearing up to embrace these challenges for months and we aim to build up our capability, experience and proficiency to service our clients to the best of our abilities to avoid penalties.
In the coming weeks, perhaps we can share some of our experience in executing and learning this new process with you.
For more about GST Accounting Services, please visit http://www.rsmmalaysia-outsourcing.com/accounting.html