MALAYSIAN retailers are ready to switch from the goods and service tax (GST) system to the sales and services tax (SST), said the Malaysia Retail Chain Association (MRCA)

Amidst concerns by some sectors that the three-day adjustment period will be too short, MRCA president Garry Chua said the SST system is simpler compared to the GST system and expects an easier transition than when GST was first implemented in 2015.

“From GST to SST, we already have in place the old system.

“The GST system was quite expensive to implement in the business, which is why we advise our members to retain the GST software while SST is implemented,” Chua reporters at the International Retail Franchise Exhibition in Kuala Lumpur today.

The Small Medium Enterprises’ Association is expecting a chaotic switch to SST in September, as there will be only three days to adjust their systems once the tax is made into law.

Its president Michael Yang recently told The Malaysian Insight that pricing systems can only be set when the law is passed and gazetted.

The government has set September 1 for the SST to come into effect. It aims to table the bill for the SST next week and expects it to be passed and gazetted by August 28.

The SST sets three tax rates, 0%, 5% and 10% for goods and a flat 6% for certain services.

Only businesses that earn more than RM500,000 will be eligible to levy the tax.

MRCA’s Chua said he expects prices of consumer goods to drop when SST is implemented as fewer retailer will be involved in collecting the tax.

“Our member stores that had to collect GST was more than 450,000 companies, during the SST days, we have only about 100,000 companies involved.

“So more essential items will see a price reduction,” he said.

Chua added that the SST involved three sectors, namely manufacturing, services and the import sectors, which he said must cooperate with the government by reducing their prices before retailers are able to do so.

He called for strict enforcement against excessive profit making.

On the future of retail trends, Chua said the government should support the digitisation of the retail sector in the form of tax breaks.

“The retail sector must be balanced offline and online,” he said to a question on brick and mortar retailers vacating shopping malls.

“We encourage our members to go digital that is why we have digital memberships like Lazada, Lelong and Mudah and others. Going digital is the way to survive long term.

“If the government cannot give us grants for digitisation, at least give us tax breaks,” he said. – July 26, 2018.