GST refunds crucial for small businesses

THE Goods and Services Tax (GST) introduced on April 1 has had its share of teething problems and tough lessons, as we pointed out in this space on July 12 to mark its 100-day milestone.

For the people who have to live with the fact that many of their bills now contain the extra 6% GST charge, they may finally be getting the impetus to make adjustments in the way they spend. Serious lifestyle changes, especially for those who like to spend beyond their means, may be a healthy outcome of the GST in their situations.

But the real problem that needs to be ironed out, as featured in our front-page report yesterday, must surely be with regard the GST refunds.

Our Customs Department has to be commended for setting a 14-day deadline for the refund process (if filed online, and a 28-day deadline for the manual process), which it claims is on par or even better than that of many developed countries.

But the true test of its success must be on its execution. That only 40% of GST-registered companies are receiving their refunds within the stipulated 14-day schedule is cause for concern.

Businesses, especially the SMEs, have a right to complain that delays result in cash flow problems that could have serious implications on their continued existence. But the reasons for the delays, as identified by the Customs Depart­ment, put the ball squarely back in their court. These include simple filing errors and discrepancies in their company profiles and banking information.

Online transactions have evolved and many have embraced this technology for many of their daily tran­sactions. Today, more people are filing their tax returns online and are assured of speedy refund if there is any overpayment. Online banking and online shopping likewise have gained greater traction as we become more con­vinced that our payment is secure and refunds are fast. Not many may be aware that there is a booming private training business going on where companies are taught how to use the GST software and to consolidate their company finances.

These firms know that many businesses, especially the smaller companies, have been ta­king it easy and have their own unique ways of keeping their books in order. The key to getting this GST refund process right is for all parties to be committed to making it work.

Companies must do their part to train their accounting staff to be error-free. They must be prepared to engage the services of the professionals if they think their staff have trouble getting it right. Most of us can file our tax returns within five minutes and get it right. But there are also those who prefer to hand over this task to a tax agent because their own record-keeping is in a mess.

It is the same with the GST refund. The Government has to be sensitive to the complaints of the business community, but it must also not allow them to carry on with their old habits. The Customs wants to be efficient in ensuring the GST works, but in this current period when the pro­blems are still aplenty, it must also be prepared to channel resources to help out those companies that are struggling.

Implementation can be both efficient and friendly. The reasons for the delays can be solved. We all should look forward to the day when there is 100% compliance for GST and also 100% success in the refund process. A vibrant and happy business community is good for the economy of the country.