'Keep GST rate for at least five years'
HIGHER THAN EXPECTED: Federation concerned about compliance burden on manufacturers, especially SMEs
MANUFACTURERS want the government to maintain the six per cent goods and services tax (GST) for at least five years from its implementation in April 2015.
The Federation of Malaysian Manufacturers (FMM) describes the rate as higher than anticipated and would impose a heavy compliance burden on manufacturers, especially the small and medium enterprises (SMEs) that constitute 98.5 per cent of all businesses.
"We are concerned about the implementation capacity of government agencies to disburse GST-related facilities and grants to SMEs.
"In addition, FMM seeks greater clarity and certainty about mechanisms for timely refunds on input GST, which remain a main concern for exporters," it said in a statement.
Countries in the region had increased their GST rates gradually. For example, Singapore took nine years to increase its GST from three per cent to four per cent, and another four years to raise it to seven per cent.
"The reduction in corporate tax rate following the implementation of the GST is not sufficiently aggressive to enhance Malaysia's attractiveness as a destination for foreign investment, taking into account the current corporate tax rates in neighbouring economies."
FMM, however, welcomed the restructuring of the personal income tax, which extends the maximum chargeable income rate from more than RM100,000 to more than RM400,000.
"This has been our recommendation to the government for the purpose of attracting and retaining talents in the country."
Manufacturers are also pleased with the incentives for skills training, where RM400 million has been allocated for the Human Resources Development Fund.
On the Flexible Work Arrangement programme, FMM said it can help improve productivity, increase the participation of the latent workforce and broaden the supply of manpower.