KUALA LUMPUR: The SME Association of Malaysia strongly opposes any suggestion of implementing the goods and services tax (GST) in 2022, in particular with the proposed 4% tax rate.
“If such a proposal is accepted, it will not only disrupt business operations, but it will add costs and affect the recovery of the business.
“We acknowledged that GST is a much better tax system than SST but this is a bad timing to introduce as we do not foresee a business recovery to happen in 2022,” president Datuk Michael Kang said in a statement on Tuesday.
Kang said the government should only consider the implementation of the GST when the country’s economy recovers, possibly in 2023 or 2024.
“We suggest that the tax rate should start at 3% instead of 4%, as proposed by some parties,” he added.
Based on the recent survey on SMEs survival and business impact under the National Recovery Plan (NRP) conducted by the SME Association that ended on August 20, it concluded the following findings:
- 25% of SMEs have discontinued business operations;
- 54% of SMEs either closed temporarily or ceased operations;
- In terms of the company’s performance in 2020 compared to 2019, only 4% recorded an increase, 8% no change, 88% saw a decline in performance;
- On the performance of the company in May, June, and July 2021 only 2% business rose, 7% no change, 91% performance declined;
- 45% of businesses will consider temporary or permanent shutdowns if they are unable to start operations immediately;
- 58% plan to lay off at least 30% of its employees if businesses are not allowed to operate under the NRP;
- 48% agreed with the government’s recent decision to start relaxing certain restrictions on fully immunized individuals and;
- The Wage Subsidy Program is the most beneficial program under the 2021 National People’s Well-Being and Economic Recovery Package (Pemulih).
The SME Association said the survey results indicated that most SMEs were in the most vulnerable stage and were likely to shut down if the economy remained closed.
“With the results of this indicative survey, we expect that another 200,000 SMEs will temporarily or completely close their operations by the end of October,” national VP Chin Chee Seong said.
Kang urged the government to focus on helping small and medium-sized businesses recover as quickly as possible, rather than adding to their burden and creating difficulties for their businesses.
He also suggested that the government look into providing more aids such as waiver for 2021 income tax and business license fees, an additional three months bank moratorium with free interest, 50% subsidy in rental for retail SMEs, 50% subsidy in electricity for affected companies, an additional three months under wage subsidy program and incentives for SMEs to restart their business with extra hiring subsidies.