Despite earlier objections, the implementation of the Goods and Services Tax (GST) at a rate of 6% since April 1, 2015, has been a great success.

The consumption tax, introduced to replace the Sales and Service Tax (SST), was not been well received by some quarters at the initial stage but in the end, it became a saviour to revenue contribution in the midst of the falling oil prices which had dented the government’s income coffers.

The GST had slowly gained acceptance and fared well, thanks to the hand-holding programmes that were initiated about a year ahead before the implementation.

As at Dec 1, 2015, the number of companies that were GST compliant and registered with the Customs Department stood at 395,524, an indication that businesses have accepted and were convinced the new tax regime as good for them.

Royal Malaysian Customs deputy director-general (customs and GST) Datuk Subromaniam Tholasy said some critical factors that made the entire exercise a success included the installation and upgrading of accounting software, reviewing business systems and processes to comply with GST law.

We had appointed GST advocates and ambassadors, public acceptance and persuasion programmes, which were carried out to train public and private non-government organisation (NGOs).

“The progress has been good and there are no major issues except for some delays in refunds in the early part of the implementation,” he said when reviewing the implementation of the GST which is practised in over 160 countries.

He attributed the delay in refund to errors in filling up the returns, incomplete submission of returns and bank information, failure to contact the company concerned after seven days from the date of issuance of the letter, as well as, no or slow response from the applicants to the queries by the refund officer.

“However, after eight months of implementation, more than 70% of the refund have been paid within 14 working days. We will continue to improve our processes to shorten the refund period,” said Subromaniam.

He said compliance by the businesses stood at more than 90% in terms of submission of GST-03 returns, with the remaining mainly from the retail sectors that were facing unavailability of the ‘Point of Sale’ (POS) system.

Subromaniam said the way forward for every retailer, was to use the POS system even though the GST Act 2014 has not mandated the requirement of the POS system.

The Customs Department, however, has proposed to make it mandatory for certain retail industries.

In terms of revenue, as announced by Prime Minister Datuk Seri Najib Razak in the 2016 Budget, the Customs department was on track to reap the target of RM27 billion from GST collection this year.

For 2016, GST collection is projected at RM39 billion, of which significant contribution is expected to come from the retail and services sectors such as food and beverages, telecommunication services, broadcasting, advertisements and security services among others, Subromaniam added.

Meanwhile, the GST implementation is part of the government’s tax reform programme to enhance the capability, effectiveness and transparency of tax administration and management.

While public acceptance towards the GST remained encouraging, there is still some quarters which have yet to come to terms with this new tax system.

Among the reasons cited were failure to understand the system which is more efficient and transparent compared with the poor tax collection system of the SST, a single stage of consumption tax where businesses cannot recover the tax paid on their purchases.
The anti-GST groups contended that the tax would be a burden to consumers and was unfair.