GST collection could exceed RM42b target, says customs director-general

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KUALA LUMPUR (Sept 18): The goods and services tax (GST) in the country could exceed its RM42 billion collection target set for this year, says Royal Malaysian Customs Department director-general Datuk Seri Subromaniam Tholasy.

Subromaniam said the amount of GST collected year to date has surpassed its collection in the same period last year, but declined to provide the exact collected amount.

"If I give you the figure for the collection as of yesterday, it would not be accurate as GST is collected towards the end of the month, but what I can share based on the previous month is there has been an increase compared [to the same period] last year," he told reporters at a media conference in conjunction with the GST Conference 2017 today.

Subromaniam also shared that some of the GST laws, in particular those pertaining to digital service providers, are currently being amended.

"We are in discussion with the tax authorities so that we can amend some provisions in the GST Act, so that we can tax the digital economy, in particular the service providers.

"For example, one of the requirements for GST is service providers need to have a place of supply, or a permanent establishment in Malaysia, and if their place of supply is elsewhere other than Malaysia, it becomes a bit difficult to tax, so we are looking into this," he said.

He shared that the amount of additional GST revenue from the digital economy could come up to a few billions of ringgit.

"To tell you the truth nobody really knows how big the monster is out there, once we amend the law and look at the details we will know, it runs into several billions.

"We will be in consultation with industry players on this, and we hope to be able to [table] the amendment at the next parliamentary seating," said Subromaniam.

Subromaniam stressed that the amended GST law would have implications for the business-to-consumer (B2C) segment of the digital economy, and not those in business-to-business.

"The digital economy is all about B2C, for example a local software company providing services to consumers pays GST, but a foreign company providing the same services does not, and this creates a discrimination so we need to correct this to ensure that our local players are on [a] level playing field [with the foreign counterparts]," he said.

Subromaniam did not mention names of companies that could be impacted, but to put things in perspective this would apply to services in the digital sphere, such as Uber and Facebook.

Subromaniam shared that at present, there are 453,000 companies that have registered for GST. Out of this number, approximately 100,000 companies were small scale companies which had annual turnover of less than RM500,000, but had registered for GST voluntarily.

"These companies had registered so that they can claim input taxes, and also the bigger companies tend to not want to deal with [smaller companies] that have not registered for GST," he said,