KUCHING: Micro and small businesses should be spared full GST-style compliance requirements under any revised tax framework.
Small and Medium Enterprise (SME) Association of Sarawak president Jordan Ong Chung Siang (pic) said any introduction of Goods and Services Tax (GST)-like features into the existing Sales and Service Tax (SST) framework must remain practical and manageable, particularly for micro and small businesses.
He said SMEs understood and supported the government’s objective of making Malaysia’s tax system more efficient, transparent and sustainable, but smaller firms did not have the same administrative capacity as larger companies.
“Larger companies generally have finance and accounting teams, while many smaller businesses operate with only one or two administrative staff and some rely on external accountants,” he told Sarawak Tribune.
He said about 77 per cent of businesses in Malaysia were micro businesses.
“For these firms, additional requirements involving detailed invoices, transaction records, input-output tax reconciliation, periodic submissions and compliance checks could translate into significant additional costs and manpower.
“I believe the principle should be ‘simpler for SMEs, stronger for larger businesses’. We should not have a one-size-fits-all system,” he said.
He said higher registration thresholds would be needed for micro and small businesses if GST-like mechanisms were incorporated into the SST framework.
“The government had already adopted this approach in parts of the existing SST system, with higher thresholds introduced for certain services to reduce the number of small businesses affected.”
According to Ong, some categories, including food and beverage, construction and private healthcare, have a RM1.5 million threshold, while accommodation, logistics and rental or leasing are among those with a RM500,000 threshold or different requirements.
“This differentiated approach should be retained and, where appropriate, strengthened to protect micro and small businesses from disproportionate compliance costs.”
For smaller businesses falling below the relevant threshold, he proposed a simplified mechanism rather than requiring them to comply with the full requirements of a GST-style system.
This could include simplified invoicing, less frequent reporting, straightforward record-keeping requirements and a single digital platform, which he said could significantly reduce the compliance burden.
In light of this, he said sufficient transition support would also be necessary if the government proceeds with changes to the tax mechanism.
“This should include clear guidelines ahead of implementation, free training and workshops for SMEs, support for accounting and e-invoicing software, an adequate transition period and a responsive helpdesk for business owners.”
For Sarawak in particular, he said accessibility must be considered because many SMEs operate outside major cities.
“Government agencies should therefore work closely with associations, chambers of commerce, accountants and local business organisations to conduct outreach programmes across the state.
“Most importantly, businesses need certainty and sufficient lead time,” he said.
If there is a major change in the tax mechanism, he said SMEs should be given adequate time to understand the new requirements, upgrade their accounting systems, train staff and adjust their pricing and cash-flow planning.
Ong said tax reform should not be measured solely by how much revenue it generates, but also by how easily businesses can comply with the system.
“If the system is simple, digital, transparent and proportionate to the size of the business, SMEs will be much more receptive,” he said.
He said SME Sarawak was prepared to work with the government on tax reform, but strongly encouraged consultation with small and medium enterprises before implementation.
“The final framework should protect the competitiveness and cash flow of micro and small businesses.
“A good tax system should bring more businesses into the economy without making it so complicated that compliance itself becomes a burden,” he said.
