KOTA KINABALU: The Malaysian Association of Tour and Travel Agents (MATTA) has urged the government to consider a deferment of three to six months to allow businesses registered under the Goods and Service Tax (GST) to fully test run their systems before the first tax invoice is issued on 1 April 2015.
Its vice president inbound, KL Tan, said MATTA members have no experience tackling the complexities of the transaction-based consumption tax and they need time to train the appropriate staff, incorporating GST software to their operating system and changing their business model to cope with GST.
Looking at the heavy penalties imposed by the Royal Malaysian Customs for incorrect returns and other offences, he said the government also should consider waiving all these penalties for at least one to two years to facilitate and assist GST-registered businesses on implementation.
Tan said this while on the final leg of MATTA Malaysia nationwide GST seminar to prepare its members for the impending GST implementation.
The first seminar started in Kuala Lumpur on Sept 19, followed by Penang, Kedah and Perak on Sept 22-23, Johor Bharu Sept 26-27, Kota Kinabalu on Oct 1-2 and the final stop in Kuching on Oct 3-4.
Due to the overwhelming response and positive feedback from members, MATTA will organize additional GST seminars for front liners, reservation, sales and marketing, operations staff of travel agencies in order for members to manage GST into their respective companies.
MATTA expects more than 1,500 participants to attend the GST seminars nationwide.
Tan noted that the GST treatment for the travel industry is highly complex as it involves selling of products and services which are standard rated, zero rated and exempt supplies in a single tour package. In addition, sale of regional tour packages (for example tour packages sold by Malaysian inbound travel agents involving various stopovers in Thailand, Indonesia, Singapore and Brunei) makes GST treatment more complex and requiring highly trained staff to address the various GST issues in order to submit accurate GST returns. Most of the travel agencies are micro and small companies lacking resources and manpower.
Furthermore, while the GST Guide on Travel Industry recently issued by Customs has provided the much needed guidance, there are still numerous uncertainties which require further deliberation and clarification from the department, without which, GST adoption may be interrupted. Such uncertainties will mean that the tour and travel agencies (and possibly the Customs) may need more time to iron out these challenges unique to the industry, he added.
Tan also said that travel agencies business model have to make necessary changes to manage GST. This includes a redesigned new tax invoice, credit control policies, timing of sales and purchases, pricing and relationship with suppliers and customers.
He said cash flow impact is inevitable for businesses with extended credit terms. For businesses above the annual threshold of RM500,000, a GST-registered company will have to pay net GST one month after the taxable period even though GST to be collected from customers has not yet been received.
“We are not entirely sure of the impact on domestic tourism in Malaysia but we hope the impact will not be too drastic at the initial stage. A standard GST rate of 6 per cent is imposed for domestic air tickets for all air transportation within Malaysia,” he said.
Tan also noted that sale of outbound tour packages (including Haj/Umrah) is a zero rated supply and international air tickets (also zero rated) will not be subject to GST. However, he pointed out that the service fee or commission charged by the local travel agent is a standard rated supply.