Malaysian Firms Are Urged To Prepare For GST

by Mary Swire, Tax-News.com, Hong Kong

13 October 2005

Deloitte & Touche, the leading accounting and professional services firms, is advising the senior management of Malaysia's companies to begin making preparations now for the introduction of the goods and services tax (GST), which is due to go into effect on January 1, 2007.

Although Malaysia has not yet passed the GST law, Nigel Mellor, Deloitte's indirect tax leader for Asia Pacific, told a press briefing at the 31st Deloitte KassimChan Tax Management Seminar that it will take at least 12 months for companies to prepare adequately for the introduction of the tax.

“The sooner companies start preparing, the better it is for their clients and the Government,” stated Mr Mellor.

Under a GST system, companies must ensure that they have systems in place to report all business transactions accurately. Mr Mellor advised Malaysian firms to establish a task force within their organisation consisting of senior staff to oversee the transition period towards the introduction of the tax.

The Malaysian government has been studying GST and value added tax systems in various countries, including in Europe, Canada, Australia South Africa and Pakistan, but according to Mr Mellor, it is likely to most closely follow the British model. If so, this will mean that financial services, education and healthcare will be exempt.

The government has not yet decided at what rate to levy GST, but Mr Mellor forecast that it will be at the lower end of the average rate in the Asia Pacific region, which currently stands at 5% to 10%.

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