Elements of Compliance Costs- Lesson from Malaysian Companies Towards Goods and Services Tax

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Asian Social Science; Vol. 9, No. 11; 2013 ISSN 1911-2017 E-ISSN 1911-2025 Published by Canadian Center of Science and Education

Elements of Compliance Costs: Lesson from Malaysian Companies towards Goods and Services Tax (GST)
Mohd Rizal Palil1, Rosiati Ramli1, Ahmad Fariq Mustapha1 & Norul Syuhada Abu Hassan1
1

School of Accounting, University Kebangsaan Malaysia, Malaysia

Correspondence: Mohd Rizal Palil, School of Accounting, Faculty of Economics and Management, University Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia. E-mail: mr_palil@ukm.my Received: May 6, 2013 Accepted: June 20, 2013 Online Published: August 30, 2013

doi:10.5539/ass.v9n11p135 Abstract

URL: http://dx.doi.org/10.5539/ass.v9n11p135

Various parties including academics, professionals and the society (the potential GST payers) are arguing about the introduction of GST in Malaysia. Goods and Services Tax (GST) or Value Added Tax (VAT) is a consumption tax imposed on the sale of goods and services. The Malaysian government introduce this potential tax mechanism, in order to increase the existing tax bracket and replacing the long-implemented service and sales taxes. With the introduction of GST, the Malaysian government felt it would provide them with the prospect to reduce the rates of individual and corporate income tax. However, do all companies particularly small and medium enterprises (Companies) ready to adopt the systems efficiently? If they could adopt the system, how much their compliance costs involved such as developing new software, human resource training and accounting systems? The objective of this paper is to obtain companies’ compliance costs and its elements and to provide suggestions to the tax authority what are the essential of companies to minimize their compliance costs. The data was collected through questionnaire from various enterprises throughout…...

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