GST profit-margin restriction draws mixed
reaction
The restriction on businesses against raising their
profit margin upon the Goods and Services Tax (GST)
implementation has received mixed response from
industries which felt that the government should instead
monitor the prices closely from the initial supply
chain.
Royal Malaysian Customs Department GST
director Datuk Subromaniam Tholasy was reported as
saying that traders should not mark up their profit
margin three months before and 15 months after the GST
enforcement, cautioning them that such action would be
tantamount to profiteering.
He said the imposition of the restricted period was
aimed at curtailing unscrupulous traders from marking up
prices to get higher profit margin.
"Why must we always think that the costs would go up
(upon the GST implementation)? There is also the
possibility of prices coming down. We want retailers to
keep their net profit margin", he told Bernama. |
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Subromaniam felt that the electricity tariff cut from
March 1 to June 30, 2015 should lower production costs.
Commenting on the restriction, Brahim's Dewina Group of
Companies business development and marketing director
Ahmad Husaini Hassan said goods brought in by importers
should be controlled as any changes in the prices would
affect the whole supply chain.
"We would agree (to the restriction) if the government
were to go after importers who under-declared taxes, as
they have potential to raise the prices (factoring in
the GST initial price).
"In fact, by doing this,
the prices will be cheaper. We (supply chain and
consumers) will thank (the government) for that," he
told Bernama, adding about 50% of raw materials used in
Brahim's products were imported.
On the
contrary, Subromaniam said such a problem would not
occur as importers too had to register for the GST to
claim the input tax.
Malay Businessmen and
Industrialists Association of Malaysia (Perdasama)
president Datuk Moehamad Izat Emir commended the Customs
Department for curtailing industries from raising the
profit margin three months before the GST
implementation.
"This would provide retailers with a cooling off period
to enable traders to be mentally ready for any profit or
loss.
"However, restricting industries from
raising profit margin till 15 months after executing GST
needs to be studied and discussed," he said.
Poh Kong Holdings Bhd executive director Ermin Der Ming
Siow viewed the restriction as 'unfair' as this was
against the Competition Act 2010 as companies were
operating in a free market economy, allowing them to fix
prices.
He said the move was not business
friendly as companies had to deal with fluctuating costs
of raw materials and logistics such as transportation
and labour which were beyond their control.
"Retailers are holding back their profit margin at the
moment," he added. – Bernama, February 23, 2015.
Source:
The Malaysian Insider
, dated
23/02/2015 |