Malaysia GST: Cost of business goes up

Malaysia GST: Cost of business goes up
Original Penang Kayu Nasi Kandar managing director Burhan Mohamed.

AFTER spending many sleepless nights preparing for the advent of the Goods and Services Tax (GST), business owners are heaving a sigh of relief.

Having invested a substantial amount of time and money to learn and implement the system, it seems to be business as usual now.

Original Penang Kayu Nasi Kandar Sdn Bhd managing director Burhan Mohamed's "GST journey", in fact, started three years ago.

Cash registers in his chain of restaurants were installed with software to include 6 per cent sales tax.

When the GST was implemented last Wednesday, he only had to upgrade the machines to be GST-compliant at a cost of over RM10,000 (S$3,725).

But the new computer software set him back by about RM300,000.

His three new finance staff members take home RM10,000 plus monthly, which is additional cost to the company.

Burhan expects a big chunk of his GST expenditure to go to his auditors and tax agents as their charges are calculated based on the restaurant chain's revenue.

"I have no choice, I am at their mercy. I'm not highly educated. I hired one of the top accounting firms so that I could sleep well at night. I want to make sure that everything is in order."

Despite having to spend an estimated total of RM500,000 on the replacement tax system, he welcomed the GST and was eager for it to kick-off.

"Because I was charging 6 per cent all along, I lost many customers to outlets which did not charge sales tax.

"GST has levelled the playing field. Now everyone must charge 6 per cent extra. I expect my business to get better. But there will be no change in prices at my outlets," he assured.

The good-natured entrepreneur is confident of getting his investment back as the input tax is claimable from the Government.

Sharing how his outlet manager in Penang suffered a blood pressure spike on April 1, Burhan said this happened after several angry customers started questioning their bills.

"We want to be transparent but there were hiccups with the cash register. My manager was so stressed that he threatened to call the police if the technician did not settle the problem quickly.

"We do not want customers to misunderstand and accuse us of profiteering," he said, adding that many food outlets were still struggling to get the GST correctly implemented.

Telecommunications shopowner Chang Teik Seng registered his company with the Customs Department in September last year.

Describing the entire process as "very scary", he said as a small-time businessman, he was stressed over running foul of the law.

"I've had so many meetings with my accountant. I even dragged my family with me to the free GST talks organised by the Government.

"As the talks were in English and Malay, we found it tough to understand especially when everything is so technical," he said.

Chang has spent close to RM8,000 to prepare for the GST and expects his accountant's bill to double.

"I paid RM5,000 for the GST software only to be told that it doesn't work on my old computer. I had to fork out another RM2,000 for a new machine.

"My accountant who used to charge me RM10,000 per annum has asked me to be ready for a RM20,000 bill because of the longer hours and heavier workload. If I don't cough up this amount, he won't help me," he lamented.

Chang, who turned to attending seminars in Chinese to better understand the GST, has not hired anyone to cope with the clerical work.

To save on operating costs, his sales team is assisting with the new administrative system.

Describing it as a "steep learning curve" for all, he said: "It's only been a few days since GST was introduced. Better to fami­liarise ourselves with the system and get the documentation done right, before chasing after sales. Otherwise, I may end up with a big headache!"

Appealing to the Government to be more lenient with errant business operators, he asked for a grace period before action is taken for any wrongdoing.

Afraid of being fined for non-compliance, he said the requirements were still hazy.

"I'm stressed and confused because so many things are still unclear. There are so many reports on what's exempted and what's zero-rated. The list keeps changing," he said, before concluding: "I will try my best to comply."

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