SINARVEZION SDN BHD is a step closer to introducing a tracking system for the Goods and Services Tax (GST), dubbed the national e-receipt system (NRS), as its proposal is now being reviewed by Unit Kerjasama Awam Swasta (Ukas).
According to Sinarvezion director Michael Choong Wan An, the fact that the proposal is now with Ukas shows that NRS, which is backed by China’s Aisino Co Ltd, has received positive response from the government.
“I suppose you can say so (that the government is supportive of our proposal). Unless the idea is good, it doesn’t go to Ukas,” he tells The Edge.
Ukas is a unit under the Prime Minister’s Department that was set up to facilitate public-private partnerships and to negotiate and administer agreements on the facilitation of funds.
Interestingly, NRS is seen as competing with the RM180 million electronic monitoring system (EMS) project that was awarded by the Royal Malaysian Customs Department to MyEG Services Bhd in December last year.
MyEG (fundamental: 3; valuation: 1.5) will undertake EMS, also known as customs online tax reporting, to wire up businesses required to pay GST. However, details of the project are not readily available.
Commenting on that, Choong says MyEG’s solution will be sold as a product and service, but it is not mandated and compulsory, whereas Sinarvezion is coming in from the top-down, which is more encompassing, for Customs or Ministry of Finance-mandated compliance.
“There is a perceived competition (that we will go head-on with MyEG) but we are doing things differently. They are automating the sales collection of GST and submission to Customs but they do not track the actual transaction at the point of consumption.”
He adds that Sinarvezion will charge a flat fee of 6.5 sen for every NRS code generated and printed in the receipt instead of charging a percentage per transaction. Income will also be derived from the sale of physical cash registers, devices and receipt printers.
A little-known private company, Sinarvezion was registered on Aug 8, 2014, and had earlier obtained letters of support from high-level officials in the MoF. It had also signed a collaborative agreement with Shanghai-listed Aisino to launch NRS in Malaysia.
Choong says NRS will need to be tabled to and approved by the Cabinet before Sinarvezion can expect any material development, such as the issuance of a letter of award by Ukas.
“[Subsequently,] we will have to present the whole project plan and there will be a lot of discussions at all levels. It all depends on Ukas and how well we can convince them.”
He adds that a new Act should come into force to ensure that those who play dirty, such as producing fake receipts and collecting GST illegally, will be punished.
It is learnt that some RM70 million will be invested in developing NRS.
There will be no shortage of investors for the project as the company is currently in talks with some government-linked companies (GLCs) and private investors to bring in fresh capital, Choong says.
“I don’t believe in growing and becoming a big public-listed company. If we have the backing of GLCs and private investors, we don’t need to go for listing.”
Sinarvezion director of business development Nevin Low says NRS will provide a solution to achieve a GST collection rate of up to 80% in three years.
“It’s fast and efficient because we are able to carry out GST administration work with automation. Our system, which covers small to large businesses, can also effectively reduce undeclared GST, even in small retailers,” he says, adding that NRS will establish a platform for tagging all invoices and receipts with a 20-digit secured code and other security elements to ensure that only GST-registered businesses are entitled to collect the tax.
“Every receipt will have a unique anti-fake code. The printed receipt will be written into the fiscal memory and uploaded to NRS at the same time.”
For offline transactions, pre-printed fixed-value receipts with nominal values of RM1, RM2, RM5, RM10, RM20, RM50 and RM100 will be made available.
“Similarly, every receipt will have a unique two-dimensional code (QR code) for data security to prevent receipt fraud,” says Low.
Choong dismisses concerns that the information gathered by NRS would be made available to Aisino, thus breaching security requirements.
“They (Aisino) don’t have a stake in Sinarvezion and neither will they take a stake in any local company. Aisino will only provide the technology. They will send their people here and transfer the technology. We (Sinarvezion) will pick up the know-how,” he says, adding that Customs will operate NRS to keep track of the invoices.
A search with the Companies Commission of Malaysia shows that Sinarvezion has an issued share capital of RM100,000.
It has two direct shareholders, namely Choong and James Khong Poh Wah, who own 50,000 shares each. The 46-year-old Choong and 47-year-old Khong are listed as the company’s directors.
Sinarvezion’s partner, Aisino, is a GLC that manufactures electronics and telecommunications equipment as well as anti-fraud tax control systems.
In 2013, Aisino had a revenue of RMB16.5 billion and profit of RMB1.78 billion. As at end-2013, it had total assets of RMB9.3 billion and net assets worth RMB7 billion.
Moving forward, says Choong, Sinarvezion and Aisino will be teaming up to venture abroad. In the near future, the pair is eyeing Iran.
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This article first appeared in The Edge Malaysia Weekly, on March 23 - 29, 2015.