Customs Dept prepared to enforce GST on April 1

PETALING JAYA: With just two weeks to go before the scheduled implementation of the controversial Goods and Services Tax (GST), Customs director-general Datuk Seri Khazali Ahmad says the department is ready for the replacement tax regime to come into force.

Although there is much anxiety over the GST with some grey areas in the policy implementation which have been raised by businesses and consumers and yet to be resolved, Khazali nevertheless feels the department is ready to cope, with some 3,000 officers in its GST division and another 1,500 to come on board by the end of the year.

"The Customs Department has put a lot of effort to ensure the implementation of GST will not have a negative impact on businesses in Malaysia, but in reality the scope that it has to cover is beyond our expectation because of the various ways of doing business," Khazali told theSun in an exclusive interview last week.

There has been much anxiety over the impending implementation of the replacement tax as some grey areas in the policy have been raised by businesses and consumers but have yet to be resolved.

"The Customs Department is the enforcement and implementation agency for GST policies drawn up by the Ministry of Finance (MoF) and will enforce what has been laid down in the GST Act 2014," Khazali said.

The Domestic Trade, Cooperatives and Consumerism Ministry, meanwhile, is charged with policing the anti-profiteering act and pricing issues arising from its implementation.

"We have been preparing our officers for quite some time, more than two years, (but) although we are prepared, the actual outcome is when implementation takes place," he said, adding that business communities have also been given enough time to understand the GST.

"But with more than 25 sectors and a few hundred ways of doing business in Malaysia, we can't really say which sectors or which types of business will have problems when GST is implemented.

"My officers will be on the ground to lend a helping hand but, to a certain extent, we also need business communities to change their ways of doing business to comply with the law," Khazali said, explaining that the department will be firm but fair with businesses which genuinely make mistakes in the initial months of implementation.

"The focus is to educate taxpayers. While we may consider not imposing heavy penalties on unintentional errors, any attempt at fraud will not escape the long arm of the law," said Khazali, adding that to promote better understanding of the tax regime, the department will be conducting advisory audits in the first two years of implementation.

" I don't want a situation on April 1 where people see a new creature coming into the nation, a 'lembaga hitam' which is going to disturb our daily life. It won't happen that way. Rest assured that will not happen because this is just another system of taxation which is more transparent," said Khazali.

A special technical group in the GST division, he said, has been set up to tackle enquiries forwarded by businesses and to come up with a segment called "DG's Decision" in its GST portal to address pertinent issues arising from businesses.

On the readiness of businesses for the GST, he said although the department had estimated to have 240,000 registrants, more than 350,000 had in fact registered.

"This number of registrations – the support – is an indicator that they are ready to do this," he said.

Asked to comment on reports that some businesses have claimed they will close down due to the implementation of GST, Khazali said he did not think it should be a problem.

"Why should they make GST an excuse for them to close down the business? And if someone says they want to close down the business, there's nothing much you can do. Because that is their choice. But don't use GST as an excuse to close down the business," he said.

He added that the department has done its best through hand-holding programmes – about 285 held all over the country last year – to ensure that smaller businesses are not left behind, but they received poor response.

Only half of 88,000 GST-registered businesses invited for the programmes in 2014 turned up, while only 7,300 of 29,000 businesses invited in the first quarter of this year showed up.

SAs to existing grey areas which the department is working on, he said businesses have the option of going for "advanced rulings" which will provide businesses with certainties on the tax treatment for specific issues and transactions.

He said many businesses have opted for this mode of clarification, but due to the generic nature of the queries the department has converted it into frequently asked questions (FAQs) and frequently asked issues (FAIs), which are now published on its website.

"Currently, public concern is focused on the prices of certain goods an services. We have no control on pricing issues but we would say that we have taken all steps to ensure that goods and services (used) widely by the public will have minimum impact on expenditures," Khazali said.

For example, through its "Taxpayers Access Point" on its website, the public can check the GST number on receipts of businesses to see if they are eligible to charge GST.

To reduce issues of misinterpreting queries and answers from the department, the public is encouraged to email queries to ccc@customs.gov.my

The department, which has 24 agents at its call centre to handle GST queries, will be deploying more officers in expectation of an increasing number of enquiries from midnight April 1.