The Associated Chinese Chambers of Commerce and Industry Malaysia (ACCCIM), supports the implementation of the Goods and Services Tax (GST), if it allows for a further reduction in corporate and indirect taxes.

ACCCIM national council member Koong Lin Loong said there is a need to reduce the corporate tax to attract foreign direct investment (FDI).

Malaysia's corporate tax, he said, is at relatively high level, compared to neighbouring countries.

"The proposed GST which is at four per cent will provide a more broad-based tax collection and revenue, if it is to replace, the sales and services tax of 10 per cent and five per cent respectively.

"It will also provide another source of revenue for the government and from being overdependent on returns from oil and gas," Koong said during the ACCCIM's media conference on the GST.

However, he also urged the government to provide a two-year grace period to enable businesses to adapt to the GST system.

ACCCIM executive adviser Soong Siew Hoong said ACCCIM members - who are mainly small and medium enterprises (SMEs) - are concerned that the implementation of the GST would eventually affect the cost of operations due to the tedious administration and accounting system.

"The SMEs are concerned that this would involve additional costs to their operations," he added, during the media briefing.

Koong said another concern is, how fast the refund of excess payments under the GST regime can be made, as this will affect the cash flow.

On proposals for the upcoming Budget 2011, he said the ACCCIM would like to see a reduction in taxes for SMEs, from 20 per cent to between 17 to 18 per cent.

"If the taxes cannot be reduced, we would like to request that the chargeable income for SMEs, be increased from RM500,000 to RM1 million.

"This will help reduce the financial burden of the SMEs," he explained.

He also said the ACCCIM was calling upon the government to review the sales tax as it is relatively out of touch with current times.

The ACCCIM will be organising a nationwide series of seminars on the GST to educate businesses, particularly SMEs, to better understand it along with the impact on businesses and issues to be potentially faced during the tax preparation.

Another ACCCIM national council member  Leong Kai Hin said the inaugural seminar on the GST, would be held from 9am to 2pm on Oct 29, at the Berjaya Times Square Hotel in Kuala Lumpur.

- Bernama