Besides GST, don’t lose grip on tax affairs – EY

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KUCHING: Ernst and Young (EY) has reaffirmed its stance in support for the Goods and Services Tax (GST) which would be implemented next year, stating that it is necessary for the long-term fiscal stability of the country.

During its annual EY 2015 Budget seminar yesterday held in Kuching, partner Yong Voon Kar said it was inevitable that GST will kick in by April next year especially now that the government has re-affirmed income tax cuts to buffer the impact of GST.

“Although there may be immediate pains for consumers, this move is necessary for the longer term fiscal stability of the country in the face of increasing international pressures to strengthen our fiscal position and to reduce the budget deficit,” Yong said during the event.

Koh Siok Kiat, executive director for EY added that, “Whilst big corporations may be quite advanced into getting themselves ready for GST, the worry is for the small medium enterprises (SMEs) which may find it difficult to get professional help at this stage.

“Although customs has offered some hand, the queue for help from customs is rather long. So what happens to businesses who fall outside of these two groups? Perhaps that’s a concern.”

On the income tax front, Robert Yoon, an EY partner said, “It is clear that the 2015 Budget has focused more on important priorities such as fiscal consolidation, improving the budget deficit and responding to the people’s needs and concerns rather than introducing further changes. So, there are not a lot of changes on the income tax front.”

He further explained that while there are no major changes proposed on income tax. Nevertheless, taxpayers should take note of the trends on transfer pricing, tax audit and investigation as well as the increase in the maximum fine for offences under the Income Tax Act 1967.

From 2014 onwards, a taxpayer has to indicate in his income tax return form whether transfer-pricing documentation has been prepared. This indicates the increasing focus of the Inland Revenue Board (IRB) in this area.

While the general time bar for raising additional assessment is five years, the time bar for transfer pricing assessment is proposed to be increased to seven years.

The increase in fine of up to RM20,000 covers a whole host of offences such as failure to furnish tax returns, leaving the country without paying of outstanding income taxes and various other offences.

It is noted that many have been caught by surprise by the IRB’s move to prevent people from leaving the country where there is outstanding tax owing to the IRB. Therefore, taxpayers are advised to check their tax status on line at the IRB website before they plan to travel overseas for their holidays.