After confusion, Chinese traders offer Putrajaya help to iron out GST kinks

KUALA LUMPUR — Malaysia’s leading Chinese business group has volunteered the expertise of its members to collect feedback and study problems faced by the business community in the implementation of the Goods and Services Tax (GST) system.

In a statement here, Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president Lim Kok Cheong said the group will establish a “tax steering task force” for this purpose, which he said will report their findings to the Finance Ministry’s GST technical committee and the Royal Malaysian Customs department.

The task force, he added, will comprise of tax experts and qualified accountants who will monitor and identify the problems encountered by businesses since the April 1 implementation of the controversial new consumption tax system.

“A major concern after the implementation of the GST... is the resulting effects on businesses whether the imposition of service charge shall be allowed,” Mr Lim observed in a press statement to announce the taskforce.

Confusion reigned during the first week of implementation of the GST, a broad-based consumption tax system that is meant to replace the previous Sales and Services Tax (SST).

One of the primary issues has been the need (or not) for service charge. Making matters worse was the fact that many consumers were confused over the difference between the service charge and service tax.

Hoping to put the matter to rest, the Domestic Trade, Co-operatives and Consumerism Ministry (KPDNKK) recently said hoteliers and restaurant operators that impose the 10 per cent service charge must have this stipulated in their Collective Agreements (CAs) with consumers.

The CAs, in turn, must be in plain display at their premises to keep consumers informed, failing which, they will face action under the Price Control and Anti-Profiteering Act 2011.

ACCCIM said today (April 11), however, that the decision by Putrajaya had been overly hasty, creating more confusion and chaos among both operators and the public.

“Subsequently there are consumers who are unhappy to pay both service charge and GST have refuse to pay the service charge.

“This has greatly affected the operation of the businesses and thus put them in dilemma,” Mr Lim said in the statement, before adding that the service charge and service tax are very different in nature.

To explain it in pure layman’s terms, a service tax is a form of tax collected by the service provider on behalf of the government. A service charge, on the other hand, is a fee charged by the service provider for delivering services.

In view of the confusion, Mr Lim said businesses and the general Malaysian market must be given more time to adapt to the new taxation regime.

“Government should not hastily announce any new policy or implementation... also, GST expounded by various government departments shall be consistent in order to avoid confusion in the market,” he said.

Noting that there is currently no legislation to regulate the collection of the service charge in the country, Mr Lim also urged the relevant stakeholders to hold a consultative dialogue on the issue. MALAY MAIL ONLINE