This website uses cookies to ensure you have the best experience. Learn more

Sme Towards Implementation Of Gst Essay

6014 words - 25 pages

The Acceptance and Awareness of Small and Medium Enterprises towards Implementation of GST in Kuala Lumpur and Johor Bahru


1.1 Background of the Study

The production of a good or service, in general, goes through several stages before the final product or service reaches the consumer. To illustrate, if the production and distribution process is divided into three basic stages of manufacturing, wholesaling and retailing, value is added at each stage through further processing, packing or other improvements before it reaches the consumer via the retailer. The GST is a tax ...view middle of the document...

It is generally perceived that with the difference of 4% between the SST rate and GST rate, the purchase price of supplies would drop accordingly and will increase demand. In practice this is not the case because operating cost remains high or same; hence price reductions will be minimum. Furthermore, many private businesses have already increased their prices, of which thousands of SMEs are dependant.

Government protects small and medium businesses, known as SMEs whose annual turnover is below RM500000 as they are not required to charge GST on their goods and that may attract customers to them. But the low business volumes put them at a disadvantage against supermarkets that command very low wholesale price. In the end, people will shop at supermarket because their prices, even with GST, are still lower than those in small businesses. In reality, the retailers are subject to GST when they purchase goods from the manufacturers and naturally will pass it on to the consumers. That is why even those businesses with an annual turnover below RM500,000 are required to register for the GST if they want to charge GST to their customers.The government also protects big companies and high-income earners by not increasing corporate tax and individual income tax. Those manufactures are not paying for the GST as they are allowed to claim back the input tax credit from the government. Moreover, part of the income that has been subjected to income tax by the middle-income earners will be taxed again by GST if it is spent on non-exempt goods and services, thus resulting in double taxation of the income. The worst case scenario is that countries implemented GST will raise the tax over the years and some of them are now charging as high as 27%. It is therefore imperative to understand the concern of SMEs in terms of GST implementation.

While one fully supports the position that cost savings be passed on immediately, the RMCD seems to be saying more.Many small businesses currently repricing for the GST are in an extremely difficult position. The problem arises from the tension between the guidelines and the apparent lack of flexibility in their interpretation, and the need for businesses to set their prices on 1 April irrespective of whether they can be sure about their cost structure.For most operators, cost savings will not be immediate, as many embedded costs are difficult to identify and will be realised after 1 Apr. Many business operators, particularly small businesses, have reported that their suppliers are either unable to provide them with a price for supplies after 1 Apr or are not reducing their pricing as expected. The RMCD has recognised this fact by stating that it expects all cost savings to be obvious within six months as savings are passed through the supply chain.

However, to ensure that the full benefits of reform are immediately passed on to consumers, there is an expectation evident in the guidelines that anticipated cost savings...

Other Papers Like Sme Towards Implementation of Gst

Taxation 2 Essay

1799 words - 8 pages demoted, and all other borrowing costs like personal loans, business loans and housing loans would certainly be at a higher rate. The choice to present GST was unfavorable, but it was the accurate decision that was made so far for the best interest of the community and also for the country. GST is quite an effective tax system as revealed by its implementation in more than 160 countries over the world. The collected tax from GST is directed into

Getting the Facts Right on Gst

940 words - 4 pages must learn the ins and outs of GST to avoid transfer pricing and increase profit margin. 5. Will the government do anything to curb inflation and to help the people cope with the implementation of GST? Ting: The Government will continue to give out 1Malaysia People’s Aid (BR1M) and also introduce a RM300 GST Voucher for the lower-income group. The Government will monitor the market from time to time to curb inflation and we always welcome

Government Service Tax

847 words - 4 pages : | | |We propose to investigate the level of awareness of Malaysian consumers on Goods and Services Tax (GST). We would also like to study | |the effects of GST towards Malaysian consumers and look into the probability of implementation of the GST in Malaysian tax system. | Draw a figure to represent the domain area seen as relevant to your study. As shown below: [pic] 3. Scoping LR process Answer ALL of the following questions

Indian Retail Industry

3441 words - 14 pages selected products through other retailers’ outlets 1. GST will benefit retailers After much deliberation, the Empowered Committee (EC) of State Finance Ministers finally released the First Discussion Paper on 10November, 2009 on the implementation of a dual GST in India. The nation-wide implementation of a dual GST signals then ext generation of tax reforms designed to remove the barriers of trade through a common market in India and to

Social Safety Network In Malaysia Budget 2010

602 words - 3 pages upgrade armed force equipment and sentry force. RM622 million will be provided to Maritime Enforcement Agency to ensure the safety in national waters. In budget 2010 also government will continue to aid the disabled, senior citizens, single mothers and children in need of welfare assistance. The Implementation and Coordination Unit (ICU) and the centralization of e-Kasih database in order to further strengthen the social safety net: 1. RM224

Small Medium Enterprise Sme

5316 words - 22 pages factor may contribute most to effects of productivity and performance of SME. III. To measure the labor force and economic growth (GDP) in productivity and performance of the company. IV. To identify the effect of inflation rate towards productivity performance of the company. 2.4 RESEARCH QUESTION * How the productivity help their financial performance? * What are the most factors that influence productivity performance of

Additional Income

589 words - 3 pages KUALA LUMPUR: Malaysia will be able to rake in an additional income of up to RM27 billion if the proposed goods and services tax (GST) is implemented at seven per cent, similar to neighbouring Singapore. Minister in the Prime Minister's Department, Datuk Seri Idris Jala said the new taxation mechanism can guarantee additional revenue of RM20 billion to RM27 billion, at maturity. "At maturity, is when, every Malaysians starts to

Strategic Management Ideas for Your Project

1750 words - 7 pages strategy with scenarios – case or general Roadmap of developing the value chain of local food business Bias in decision making How is the topic of "implementation strategy" related to the success of an organization? How important is the concept of control to strategic management? Emotional intelligence Organizational stress and management Executive coaching When should an organization use an internal vs. external change agent? How are norms formed? How

Comm132 Final Exam Answers

3679 words - 15 pages available on the website – this lack of integration means that many potential sales are lost on items that do not appear on the website that customers are looking for * Website only an alternative channel for smaller retail customers – There is more demand from SME and other consumers since over the past 3 months 1,955 email enquiries had been received (40% SME) * Reps protesting about website – CCC reps threatening to leave CCC in favour of a

E-Business in Students Life’s

2451 words - 10 pages development and experiential learning approaches that increase self-awareness and group effectiveness" (1989:p3) Adopting this philosophy, teaching strategies used in INF320 Electronic Commerce were for the students to approach a SME with a letter of introduction from the university with the purpose of working with business owners in a logical, informative manner so they become part of the real life decision making process. In this way, all

Cambridge Satchel Company

3454 words - 14 pages developing countries like Bangladesh. In this paper we tried to appraise the Problems and Prospects of SMEs in Bangladesh. We observed from the research that non availability of adequate credit, complex loan granting procedure, inadequate infrastructure facilities, problems of collateral requirements, paucity of working capital, non availability of skilled work force, poor salary structure, lack of coordination among SME related organizations, lack

Related Essays

How Gst Affect Local Enrepreneur Essay

724 words - 3 pages will impact local entrepreneur in small or medium-sized entreprise(SME) . Suppose Firm A (a Manufacturer) makes a sale to Firm B for RM100 plus 6% GST —RM106 in total. Firm A will pay VAT to the tax authorities at the end of the month less the GST they pay on goods they buy.   Firm B (a Distributor), uses what it has bought to make products worth RM150; RM9 VAT is due when these products are sold to Firm C, but Firm B can also reclaim the RM6 GST

Gst In Malaysia Essay

3240 words - 13 pages produced a total 123 Yes's and 37 No's. Yes 20 2 11 12 15 17 17 15 16 16 APPROVAL LEVEL 1 No 21 Question Set 2: Approval of GST 3 4 5 QUESTIONS Figure 2: Research Question 2 Figure 2 details questions in which answering Yes was designed to indicate GST approval. The data reveals a more conflicted view of IIUM students towards GST and its implementation, seeing as how most of the second

International Management Essay

1537 words - 7 pages OVERVIEW OF THE IMPACT OF GST IN MALAYSIA With the coming implementation of Goods & Service Tax (GST) in April 2015, many Malaysians are concerned with what this bodes for prices in general. It is inevitable that prices will be affected. There will be a positive impact on the economy due to the following: (i) Reduction in business costs: (a) Special schemes to alleviate cash flow problems (b) Credit offset mechanism (c) Can

Goods And Services Tax Essay

657 words - 3 pages policy might bring more FDIs in India and tax compliance is expected to improve- all of these are expected to improve the government revenue. But, there are certain major challenges in GST’s implementation. All the state needs to set equal State GST tax rate or else the calculation would be very difficult. Every state should be ready to follow GST policy is another major roadblock. You might ponder why a state would not want to follow. The