With less than six months left for the implementation of the goods and services tax (GST), a survey reveals that half of the Chinese small and medium enterprises (SMEs) still do not understand the various GST terms.

The report shows that only half (50 percent) of the respondents know what are standard rated supply, zero rated supply and exempt supply.

Meanwhile, only 60 percent of the respondents understand what is input tax and output tax.

Most respondents from property development are among those understand the above terms, while respondents from the food and beverages sector mostly did not understand.

The report suggested that respondents’ understandings on the various basic terms of GST need to be strengthened overall.   

This 2014 SME Survey Report by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) was carried out between 28 June and 30 July, 2014 with 541 returns received from the total of 2,000 survey questionnaires which were distributed.

The survey was conducted mainly through ACCCIM’s 17 constituent chambers and involved selected trade associations from different regions of the country.

The majority of the respondents (73 percent) had turnover of over RM500,000, and they were mainly from the hotels, property developers, construction and contractors, manufacturing, wholesale and trading, import and export, as well as agriculture, timber, fishery, farming and gardening sectors.

Food and beverages sector most worrying

Overall, the survey found that most of the respondents from the food and beverages sector were rather ignorant on GST, regardless of their understandings on the various basic terms of GST, first action to be taken, or employees and software preparation for implementation of GST, and this is worrying.

On the first action before implementation of GST, 84 percent of the respondents indicated that they will personally attend or send their staff to attend GST training conducted by Customs Department or professionals.

Only 4 percent are opting to upgrade their accounting software as an initial measure, and this implied that most of the businesses will only decide their next cause of action after they have understood what is GST.

“Unexpectedly, 1 percent of the respondents stated that the first action they will take before implementation of GST is to store additional stocks before the price increase, and most of them are from the food and beverages sector,” says the survey.

‘Most stressful aspect is lack of information’

In addition, 35 percent of the respondents found that the most stressful aspect they were facing to get ready for GST was lack of information for the public.

However, only 18 percent of the respondents feel stressful with the increase of compliance costs in getting ready for GST, besides the GST bills becoming too technical and complicated (35 percent) and increase of compliance costs (18 percent).

Overall, only 30 percent of the respondents stated that their employees and accounting software were ready for the implementation of GST.

Besides, more than half of the respondents (58 percent) hope that the government can grant a longer grace period before imposing any penalty and taking recovery actions against businesses.

Another 20 percent of the respondents wish to have tax incentives on their GST compliance cost.

“In the numerous memoranda submitted by ACCCIM to the government on GST, these two proposals are on the ACCCIM wish list and we are hoping that the government could render more assistance to businesses,” says the report.

Half of the respondents still issue cheques

On the e-banking system promoted by Bank Negara, only 34 percent of the respondents use e-banking, and most of them were from the ICT and logistics sectors.

Another 40 percent indicated that they will shift to e-banking soon.

However, the statistic show that the food and beverages sector do not use e-banking at all, and 78 percent of them have no plans to use it.

The respondents’ major concern in using e-banking was the security issue on e-transactions (76 percent), followed by the coverage and stability of broadband services (44 percent).

Nevertheless, almost half of the respondents (43 percent) stated that they will not reduce the issuance of cheque even though a 50 sen levy per cheque is being imposed.

Minimum wage increases operations costs

On the minimum wage which implemented on Jan 1 this year, 65 percent of the respondents indicated that they need to adjust their staff salaries.

Among them, respondents from Terengganu and Sabah are greatly impacted by as much as 82 percent and 80 percent respectively.

Other than that, those from Kuala Lumpur were not much affected as 59 percent of respondents said it would have no effect on them.

In addition, 65 percent of the respondents responded that the minimum wage had increased their operations costs.

Those from Kedah, Sabah and Terengganu were severely affected with 98 percent, 90 percent and 76 percent claiming that they had suffered from cost increases due to the minimum wage.