Pass on cost savings from GST to consumers, says Customs

Registered retailers who derive cost savings from the Goods and Services Tax (GST) should pass them on to consumers or else it is going to be an unreasonable profit, says Royal Malaysian Customs Department Assistant Director from the GST Division, Annie Thomas.

"Since the registered retailer is entitled to claim the input tax, GST is not a cost to the registered retailer and therefore, the cost of goods or services before charging GST should not include the GST incurred on the input.

"Mark up for the price at the point of sales should be done on actual cost, not on consideration price to the supplier, which is an incorrect method," she said at the National GST Conference 2014 here today.

The portion of GST incurred claimed as input tax has to be deducted from the price of the goods supplied to the registered retailer before the registered retailer marks up (value add) to the cost of sale.

This is important because the registered retailer has claimed the amount of GST on acquisition of the goods and that the GST on input is not a cost to him.

Annie added that a non-registered retailer will face difficulties to compete with those registered retailers as their costs are much higher.

"A non-registered retailer would not be able to claim input tax, so their costs are going to be higher compared to registered retailers.

"Their profits will also going to be less compared to those registered because they cannot claim input tax," she said.

Registered retailers should talk to their suppliers and customers on the cost savings, said Annie, adding that they should ask suppliers to be registered if they reach the threshold revenue because it mandatory for them to be registered.

Any retailer who makes taxable supplies (i.e. standard and zero rated supplies) where the sales turnover in a year has exceeded RM500,000 is liable to be registered as a registered person, explained Annie.

However, any retailer whose sales turnover does not reach the threshold of RM500,000 can choose to be registered voluntarily, she added.

Annie was one of the speakers for a session entitled, "Impact of GST on retailing", at the conference organised by the Malaysian National News Agency (Bernama) and Tax Advisory & Management Services Sdn Bhd.

The session was moderated by Bernama Acting Deputy Editor-in-Chief Mikhail Raj Abdullah.