|
The shipping industry in the country has welcomed the recent decision by the
Ministry of Finance to defer the implementation of the goods and services
tax (GST) from Jan 1, 2007 to a new date to be announced.
In a statement, the ministry said its Tax Review Panel had received feedback
that strongly suggested a need for more time to further refine the proposed
GST model and to ensure businesses were ready to implement the GST.
The private sector had highlighted the need for lead-time, especially for
potential changes in business processes, development of software and
training of personnel, it added.
A major source of anxiety for the shipping industry was the ambiguity over
the imposition of the new multi-stage tax collected on sales at all stages
of production and distribution.
The GST is a tax on the value added at each stage.
This is basically the difference between the tax on the sales (output) and
the tax on the purchases (input). It is reflected in the invoices issued to
purchasers of goods or services.
One area which the shipping industry sought clarification was over Malaysian
exports that were transshipped via a foreign port and via a local port.
It was pointed out that the tax regimes does not seem to distinguish the
imposition of the tax on goods that are, for instance, shipped from the East
Malaysian of Sabah and Sarawak via Singapore and that shipped via a
Malaysian port like Port Klang.
It was felt the unintended impact of the GST would have been to encourage
traanshipment via a foreign port like Singapore.
Under such a scenario the tendency will be for the trade to flow via
Singapore rather than Port Klang and this would severely undermine a
successful national policy that has made Port Klang in a regional load
centre, a source said.
Exports should be zero- rated - i.e. the exports are covered by GST but the
rate is zero. An exporter can, therefore, claim tax credit in respect of its
inputs on which GST has been imposed. Exports are not to be exempted as this
would mean that an exporter cannot claim tax credit on the inputs.
In its latest issue of its newsletter, the Malaysian Shipowners Asociation
had urged its members to get ready for the implementation of the Goods &
Services Tax.
MASA, which planned to hold dialogue with its members on the issue, urged
shipowners to provide their comments on the impact of the proposed new tax
collection system.
PricewaterhouseCoopers Malaysia senior executive director Wan Heng Choon
said the postponement was not unexpected as GST was not simply a tax issue
but had impact on the whole supply chain.
The Federation of Malaysian Manufacturers (FMM), however, felt that the
implementation of GST would erode the competitiveness of local industries,
particularly exporters.
The effect of GST on input costs at multi stages, as opposed to the current
single-stage sales and service tax, would raise the cost of funding the
inputs, FMM said.
“During this time of acute global competition and high energy prices, any
rise in costs can affect our industries' competitiveness and dampen demand
for our exports,” it said. |
