KUALA LUMPUR (Oct 31): The government should consider establishing a framework for blanket exemptions, and introduce mechanisms to avoid tax-on-tax scenarios, to ease some of the challenges faced with the implementation of the sales and service tax (SST), says EY Advisory Services Sdn Bhd.

An example of a tax-on-tax scenario would be where service tax may be charged twice on a single taxable service, EY said in its Budget 2019 wishlist statement today.

EY said although the SST had been in place for two months, many businesses are still facing challenges managing their SST data and compliance.

It therefore suggested for the MySST Portal to be enhanced to provide an easily accessible and user-friendly interface for any SST-related activities such as return submissions, payments and applications for exemption.

The SST treatment on goods and services should also be standardized, with supplementary legislations and guides fine-tuned to be consistent with the SST Acts.

Meanwhile, although the goods and services tax (GST) was abolished in June 2018, EY said the re-introduction of SST would still have an impact on the disposable income of the lower and middle-income groups.

"To alleviate the burden on these groups, the government should consider reducing the income tax rates for the lower and middle income tax groups (i.e. those with chargeable incomes of RM15,000 to RM100,000) by one to two percentage points, as well as broadening the income bands," said EY.

EY hopes for the government to also address other areas such as the speed of processing tax refunds, tax appeals, and finalizing tax returns.

"Providing greater certainty and clarity on certain tax treatments will also be most welcome, particularly in terms of withholding tax implications, deductibility of expenditure, and whether a transaction is subject to income tax or real property gains tax," it said.

Another area that can also be looked into would be on ways to encourage growth of certain sectors, EY added.

"For example, policies should be introduced that encourage businesses to embrace digital disruption and innovation, and support small-medium enterprises and growth industries such as hospitality, selected manufacturing, research and development and engineering support activities," said EY.