The Malaysian Insight

BUSINESSES lost millions of ringgit in tax software that was rendered useless with the abolition of the goods and services tax (GST).

The GST was introduced by the Barisan Nasional government in 2015, but it was scrapped last year by Pakatan Harapan, which replaced it with the sales and services tax (SST).

Tax expert Koong Lin Loong said big corporations had spent up to RM1 million on new tax software, while smaller companies had forked out RM8,000-RM10,000 for the same when the GST was introduced.

Meanwhile, banks had spent up to RM10 million on software and systems updates preparatory to  GST implementation.

Koong said this was because the financial institutions had many branches across the country and even services offered online were taxable.

“When GST was implemented, businesses were very stressed because of the complicated nature of the tax. There were exempted goods, input tax and output tax.

“Some businesses, especially the small ones, had never come across the system before, and they were afraid of being fined if they made mistakes,” he told The Malaysian Insight.

Although the government said the tax software upgrade would only cost about RM800, the actual cost ballooned to at least RM10,000, putting the upgrade beyond the means of the smaller businesses.

SME Association of Malaysia president Michael Kang said businesses resorted to listing the expensive tax softwares as assets after installation to keep their value.

“For small businesses, they only needed a few thousand ringgit to change their software, but big companies needed to spend up to millions. This included designing the software, separating goods and others,” he said.

All this was rendered obsolete when the tax regime was scrapped in 2018, but Kang said GST software was useable if one was willing to invest some money in modifying it.

Interestingly, he said, many were keeping the GST software just in case the government should change its mind again.
 
“I think they (businesses) have generally kept it, even though it is not used now. This is because many SMEs are worried that the government may change its mind,” Kang said.

Sundry Goods Merchants’ Associations of Malaysia president Hong Chee Meng said the makers of cheap GST software took advantage of ignorant customers looking for affordability.

Many of them found out that the software required additional purchases to work.

He said there were also many different versions to GST-compliant softwares in the market when the tax system was rolled out, with many software development firms earning a tidy sum in the process.

Hong said when the newer point of sales systems were installed, many sundry shop owners did not know how to use them. They had to hire part-timers to do it for them, he said, spending up to RM200 to process the accounts. – October 20, 2019.