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Friday October 18, 2013 MYT 12:00:00 AM
Friday October 18, 2013 MYT 9:55:37 AM
by wong wei-shen
From left: Pwc's Senior Executive Director Wan Heng Choon, PwC's Tax Leader Jagdev Singh and PwC's Senior Executive Director Steve Chia having a chat after the media briefing on PwC's Budget 2014 wish list. IZZRAFIQ ALIAS/The Star.
KUALA LUMPUR: Businesses need to have information and clarity on the introduction of the much-anticipated goods and services tax (GST) early on, in order to make necessary preparations.
“The uncertainty (of a fixed date) plagues businesses in their attempt to introduce the tax. Businesses are not reluctant to introduce the tax. In fact, they are for the tax. But until they have a clear date, it is impossible for them to start gearing up for the tax,” PricewaterhouseCoopers (PwC) senior executive director Wan Heng Choon told reporters at a briefing.
He noted that there was still some 80% of the business community that was not ready for the GST.
Although the right timing to implement the GST has been much debated on, Wan said the Government should not wait until a crisis is at hand before choosing to implement the tax.
“There is no right time to introduce the GST. It should be implemented at any moment in an economic timeline where it is still in a relatively strong position. Financial prudence cannot be set aside if Malaysia hopes to achieve vision 2020,” he said.
Should the GST rate be set at 6%, the Government would rake in an estimated RM32bil in annual revenue, Wan said.
PwC expects the GST implementation to come in during the second or third quarter of 2015, at the latest.
However, senior executive director and tax leader Jagdev Singh said crafting Budget 2014 would be difficult, as solutions to reduce the nation’s fiscal deficit need to be wide-ranging.
The Government has targeted to reduce fiscal deficit to 4% and 3% of gross domestic product (GDP) this year and 2015, respectively.
“It could take longer for us to achieve 3% by 2015. It would largely depend on expenditure and Government revenue,” he pointed out.
The GST was first announced during Budget 2005 for implementation in 2007. However, in February 2006, it was deferred as the Government wanted more time to get feedback from the public.
Wan added that the repeated false starts have proven to be a constant source of frustration for businesses to be GST-compliant. Furthermore, businesses need to know the GST rate in order to prepare, he reiterated.
Meanwhile, senior executive director Steve Chia encouraged the Government to bring back the full real property gains tax (RPGT) regime to 30% to curb speculation in the property market, as well as to control spiralling property prices.
However, Hwang-DBS Vickers Research said raising the RPGT and stamp duty could pose as a risk for higher property prices.
“We understand the Government needs to be seen to be actively reining in property speculation, but we do not advocate raising real RPGT, which has had a relatively short-lived impact in the past and could push house prices higher, as sellers may pass on the incremental costs to buyers,” it said.
It could also spur sellers to postpone disposal and developers to hold back launches due to weaker sentiment, which would lead to an even tighter supply in the market, it said.
Tags / Keywords:
Business, PwC, tax, RPGT, GST, fiscal deficit
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