Latest news with #RMCD
The Sun
10-06-2025
- Business
- The Sun
Samenta seeks sectoral guidelines, higher threshold for SMEs in expanded SST implementation
PETALING JAYA: The timing and the manner of the implementation of the expanded Sales and Services Tax (SST) effective July 1 raise serious concerns for SMEs, said Small and Medium Enterprises Association Malaysia (Samenta). Its national president, Datuk William Ng, said while the intention to strengthen government revenue is understandable, SMEs are seriously concerned as they are already under tremendous pressure. 'SMEs are currently navigating a challenging operating environment marked by high input costs, tighter consumer spending, and softening external demand,' he said, adding that the upcoming expiration of the United States' reciprocal tariff pause on July 8 threatens to further dampen Malaysia's export competitiveness and expose SMEs to retaliatory trade measures at a time they can least afford it. Against this backdrop, Ng said, the expansion of SST without sufficient exemptions or a higher threshold for SMEs, risks compounding the cost burden on businesses that are least equipped to absorb it. This impact is not limited to raw material costs but extends to rent and business-to-business services that will now fall under the SST's expanded scope, he added. These increases, Ng said, will almost certainly be passed on to consumers, further driving up the cost of living. 'We urge the government to urgently reconsider the threshold for SMEs to minimise the impact on SME profitability and consumer prices. Specifically, we call for an exemption for micro and small enterprises as defined by SME Corp. or at the very least, a revised threshold of RM2 million in annual turnover, up from the current RM500,000, to ensure that only medium and larger businesses fall within the expanded scope,' he said. Ng also urged the Royal Malaysian Customs Department (RMCD) to issue sector-specific guidance immediately to help impacted SMEs determine their obligations under the expanded scope, without having to consult tax agents. 'Without clarity, many SMEs risk accidental non-compliance, despite the enforcement grace period until the end of 2025.' He added that RMCD must also clarify whether, during this transition period, it is acceptable for businesses apply SST on the point of invoice, instead of point of collection. 'Many businesses would have issued invoice in prior months, creating uncertainty on tax liability under the expanded regime,' he noted. Ng said Samenta supports the development of a fair, progressive and transparent tax framework that broadens the base while protecting the country's entrepreneurial assets. However, he added, this must be done in a calibrated manner, with genuine stakeholder consultation and alignment with current economic realities. 'While we were given a briefing on the expanded SST, we cannot consider it a consultation when it is presented as fait accompli,' said Ng. In light of heightened global uncertainties and domestic economic fragility – factors that were not as pronounced when Budget 2025 was tabled, Ng said, Samenta believes that a higher exemption threshold for SMEs is economically prudent. He said Samenta remains ready to collaborate with the government to ensure that fiscal reforms succeed without compromising the resilience and dynamism of the SME sector.
New Straits Times
10-06-2025
- Business
- New Straits Times
SAMENTA calls for higher SST threshold to shield SMEs
KUALA LUMPUR: The Small and Medium Enterprises Association Malaysia (SAMENTA) is calling on the government to urgently review the recently expanded Sales and Service Tax (SST) framework, warning that the current structure could significantly harm SME profitability and push up consumer prices. The association is proposing that the SST threshold be raised from RM500,000 to RM2 million in annual turnover, ensuring that only medium and larger enterprises fall within the tax scope. It is also advocating for a complete exemption for micro and small businesses, which form the backbone of Malaysia's entrepreneurial landscape. SAMENTA national president, Datuk William Ng, acknowledged the government's need to boost fiscal revenue but expressed concern over the timing and implementation of the expanded SST. SMEs are already grappling with high input costs, softening consumer demand, and declining external orders, Ng said. The situation is further complicated by the looming expiration of the United States' reciprocal tariff pause on July 8, which could erode Malaysia's export competitiveness and expose SMEs to retaliatory trade measures. Against this backdrop, the expansion of SST without sufficient exemptions or a higher threshold for SMEs risks compounding the cost burden on businesses that are least equipped to absorb it, Ng added. "This impact is not limited to raw material costs but extends to rent and business-to-business services that will now fall under the SST's expanded scope. These increases will almost certainly be passed on to consumers, further driving up the cost of living," he said in a statement. SAMENTA is also calling on the Royal Malaysian Customs Department (RMCD) to immediately issue sector-specific guidelines to help SMEs understand their obligations under the expanded SST. Many businesses, Ng said, lack the resources to engage tax consultants and are at risk of accidental non-compliance, even with the grace period in place until the end of 2025. He also urged RMCD to clarify SST application timing, especially regarding whether SST should be imposed based on the invoice date or payment collection date during the transition period. Many SMEs have already issued invoices prior to July 1, creating ambiguity around tax liability under the new regime. "SAMENTA supports the development of a fair, progressive, and transparent tax framework that broadens the base while protecting the country's entrepreneurial assets. However, this must be done in a calibrated manner, with genuine stakeholder consultation and alignment with current economic realities," said Ng. "While we were given a briefing on the expanded SST, we cannot consider it a consultation when it is presented as a 'fait accompli'." Ng said that in light of heightened global uncertainties and domestic economic fragility – factors that were not as pronounced when Budget 2025 was tabled – we believe that a higher exemption threshold for SMEs is economically prudent. Effective July 1, the revised SST framework will see a sales tax of 5 per cent or 10 per cent applied to selected non-essential goods, while the service tax of 6 per cent or 8 per cent will be extended to encompass a wider range of services. These include rental or leasing, construction, financial services, private healthcare, private education, and beauty services. The government expects the SST expansion to yield RM5 billion in additional revenue in the short term (equivalent to 0.24 per cent of GDP), with a long-term annual target of RM10 billion (0.48 per cent of GDP). The expanded scope is part of the government's broader initiative to strengthen the fiscal position by increasing and diversifying revenue sources. A portion of the additional revenue generated will be used to enhance public services and create greater fiscal flexibility. The revised framework also focuses on services typically consumed by higher-income individuals or non-residents, such as certain banking services, private healthcare for foreigners, and private education with annual fees above RM60,000. Given the targeted nature of the SST, which primarily affects non-essential goods and services consumed by higher-income groups, the impact on inflation is expected to be minimal.
Barnama
27-05-2025
- Business
- Barnama
TDA ENHANCES MYCIEDS FOR IMPROVED IMPORT-EXPORT EFFICIENCY
BUSINESS KUALA LUMPUR, May 27 (Bernama) -- The Technology Depository Agency Bhd (TDA) has upgraded the Malaysian Customs Import Export Document System (MyCIEDS) to an integrated digital system. The system, set to be rolled out nationwide, enhances the management of import and export support documents for the Royal Malaysian Customs Department (RMCD). In a statement today, TDA, an agency under the Finance Ministry, said the MyCIEDS facilitates the RMCD's monitoring, storage, and access of relevant documents, while enhancing customs operations to accelerate goods clearance. The system was redeveloped to incorporate the latest technology by Edaran IT Services Sdn Bhd under the Industrial Collaboration Programme (ICP), built on the Document Management System technology and integrated with the Customs Information System. It is expected to play a key role in the digitalisation of customs services while strengthening the efficiency of Malaysia's trade border management. TDA chief executive officer Sharoul Jambari said MyCIEDS is expected to enhance RMCD's operational zones nationwide and positively impact the smoothness of trade chains and the competitiveness of the national economy. He added that ICP not only fulfils procurement obligations but also acts as a catalyst for technology transfer, local expertise development and long-term value creation for the country. 'Through this approach, we can ensure a lasting impact on the economy and the local industry ecosystem,' he said. To date, TDA has successfully implemented 142 ICP programmes under government procurement.
The Sun
05-05-2025
- Business
- The Sun
Tax Matters – Failing to register for service tax can lead to hefty penalties
THE Royal Malaysian Customs Department (RMCD) is undertaking a special operation to identify businesses which have not registered for service tax purposes. This exercise is 'unearthing' businesses which have failed to register either intentionally or unintentionally. The businesses try avoiding registration so that their prices can remain lower than that of their competitors who charge service tax. Failure to register at the correct time can warrant three types of penalties: late payment penalties up to 40% of the unpaid taxes, upon conviction, fine for non-filing of the returns due to the delay in registration up to RM50,000 or imprisonment up to three years or both. In addition, there will also be a general penalty on conviction for non-registration up to RM30,000, or imprisonment up to two years or both. In the event the matter is not brought to court, the taxpayer can be subject to compounds not exceeding 50% of the maximum fine. What are the problems faced by businesses? At first glance, the requirement to register for service tax appears straightforward: registration becomes mandatory once a business exceeds the relevant threshold of RM500,000 for most taxable services, RM1.5 million for the food and beverage industry, and zero threshold for credit card providers and customs agents, where registration is automatic. In practice, registration is not always straightforward due to challenges in determining which services are taxable. Overlapping definitions, such as between marketing (non-taxable) and advertising (taxable), create confusion. Similarly, businesses providing mixed services to residential and commercial properties often struggle with segregating taxable from non-taxable components. There is often confusion in determining the threshold based on the backward and forward 12-month rules. Using the past 12 months is more straightforward, as actual revenue figures are available. In contrast, the forward 12-month projection is more subjective, as it involves forecasting future income. However, if there is a reasonable basis to believe the threshold will be exceeded in the coming 12 months, registration must be done in advance. During a future RMCD audit, with the benefit of hindsight, the authorities may allege non-compliance. In such cases, it will be the taxpayer's responsibility to justify the reasonableness of their original forecast. The export of services is not subject to service tax. However, businesses exporting services often struggle to determine if their services qualify as relating to a subject matter outside Malaysia. A common grey area is when a foreign company, with no presence in Malaysia, seeks advice from a Malaysian consultant on Malaysian matters for use in its global operations. The RMCD is aware that some businesses try to artificially fragment their business to avoid registration threshold by operating through many separate businesses. This is specifically discouraged in the legislation which will effectively disregard the separate businesses and treat them as a single business for service tax registration purposes. Added to that will be the consequential penalty mentioned above will apply and it could be regarded as tax evasion which will incur severe penalties. Once you have started any business, monitoring the threshold and determining the time in which you should register is an ongoing exercise to avoid any non-registration penalties. If your mistake is realised after the due date, the cost of the non-registration is high and equally importantly is the loss of the opportunity to benefit from the business-to-business exemption. It will be better for taxpayers to approach the RMCD on a voluntary basis before an audit is commenced. The RMCD is welcoming voluntary disclosure where you have not fulfilled your compliance responsibilities. It is willing to exercise leniency in the imposition of fines and penalties.
