Customs’ GST compliance assurance programme to help expedite refunds

This article first appeared in The Edge Malaysia Weekly, on January 22, 2018 - January 28, 2018.
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IN conjunction with International Customs Day this Friday (Jan 26), the Royal Malaysian Customs Department will be launching the Goods and Services Tax compliance assurance programme or MyGCAP.

“To encourage compliance, we will be launching MyGCAP, which is similar to what Singapore has implemented.

“We want to train accountants to be able to conduct GST health checks before submitting [their companies’] reports. But companies will first have to engage auditors to do a health check of their GST system [before applying to be a part of MyGCAP],” Customs director-general Datuk Seri Subromaniam Tholasy tells The Edge.

Given the benefits, the programme should be well received.

According to Subromaniam, companies under the programme will see their GST refunds expedited and will not need to go through vetting processes for all their GST-related applications. Companies would also have a dedicated desk officer to assist with any GST issues that might arise in the course of their business.

“The prerequisite for companies to be in MyGCAP is that their accountants have to pass the tax course offered by Customs, they have to be certified accountants under MIA (Malaysian Institute of Accountants) and each company must have two qualified MyGCAP reviewers,” he says.

The programme is slated to be rolled out in the second quarter of this year and will only be open to certain categories of businesses for now, Subromaniam explains.

Such a programme is likely to free up the time spent by Customs officers in vetting the GST returns submitted by companies. Complaints about delayed refunds have not stopped since the implementation of the tax close to three years ago.

According to the GST Regulations, those who file their GST returns electronically will receive refunds within 14 working days while manual GST returns will see refunds within 28 working days.

“Yes, there are a lot of complaints about erratic refunds. I have seen cases of those who filed later receiving their refunds before those who filed earlier. There is no apparent pattern as to how the refunds are given,” says SJ Grant Thornton indirect tax and GST executive director Alan Chung.

“The Customs states that some taxpayers have not provided sufficient documents to verify and process the refunds, hence the delays. Every now and then, though, some will come forward and claim that they have submitted everything requested but still have not received their refunds,” he adds.

Currently, the Customs vets every return submitted by companies before refunding the input tax.

“I hope this is only a ‘teething’ policy as I am of the view that it would not be sustainable to verify all refunds. The slow refunds is a clear indication that this practice is not sustainable with the manpower currently available and deployed,” says Chung.

Axcelasia Inc group chairman Dr Veerinderjeet Singh says the authorities had come across attempts to defraud, which would explain their cautious approach to refunds, to the detriment of the business sector.

“The authorities must look into this behaviour and not take a view that all taxpayers are ‘cheats’. This is not how self-assessment was meant to be. The level of trust is not there.

“Notwithstanding this, there are senior Customs officers who are balanced in their views, receptive to logic and willing to look into ways and means of trying to make things easier for compliant taxpayers. There is an opportunity for dialogue but things do take a while to be resolved,” says Veerinderjeet.

When asked about the late refunds, Subromaniam admits that there were some that were delayed for two to three months. However, about 70% to 80% of refunds are paid within a month.

“The reason for the delay is because of the difference in the timing between the monthly and quarterly filing businesses. When a business that files on a monthly basis makes purchases from businesses that file on a quarterly basis, we need to make sure that the business that practises quarterly filing actually pays the GST before we refund it,” he explains.

Subromaniam says there have been several cases of non-payment by businesses that file on a quarterly basis. He adds that companies that experience delays in their refunds should not be in such a tough position because most purchases are done on credit terms.

This year, the GST collection target stands at RM43.8 billion, up 5.5% from the previous year.

Come April, it will be the third anniversary of the implementation of GST in Malaysia — just about enough time for a new tax system to stabilise, according to studies by the World Bank and International Monetary Fund.

“Things have improved. But as always, due to the complexity of our GST system, there are a lot of industry specific aspects that may not meet the expectations of the relevant sectors. The administrators are still learning and finding out that there are compliance issues. Hence, they may be getting tougher in terms of their mindset, taking a more stringent stand in dealing with non-compliance,” Veerinderjeet says.

 

 

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