Wavelet Marketing Letter Head - For GST preparation 2014

Dear all,

Goods and Services Tax

As you will be aware, the implementation of the Goods and Services Tax (GST) regime needs to be completed by 1 April 2015, and it is for this reason that we are contacting you.

What we need you to do

We need you to deal with three main issues.

• Firstly, we need you to ensure that you have met any requirements for registering for GST that may be applicable to you.
• Secondly, we need you to prepare for the introduction of GST, and as an outcome of this, we need you to consider the impact on your current pricing of goods and services that you supply to us.
• Finally, in order to enable us to pay you within our currently agreed terms of trade, we will need you to be in a position to provide us with the correct documentation so that we can recover any GST that you charge to us.

We have addressed these issues in greater detail below.  If you have not already commenced a process for registering for GST in Malaysia, we need you to consider the issue, and follow the Steps that you need to take, below.

Steps that you need to take

We expect that as a businesses with an annual sales turnover likely to be more than RM500,000you are required to register with the Royal Malaysian Customs Department (RMCD) for the implementation of the Goods and Services Tax (GST), before December 31, 2014.

In the event that you have an annual sales turnover of less than RM500,000we would suggest that you consider voluntarily registering for GST purposes as we will give preference to suppliers that are registered so that they can pass on any savings referred to above to us.

Registration can be made via online at gst.customs.gov.my or through a manual submission to the RMCD. If you are already registered, kindly furnish us with your GST identification number.

Impact of GST on your pricing

As one of our suppliers/ service providers, we understand that you will need to review your pricing as the introduction of GST should cause the prices of many products to change.

We expect that your prices will reduce with the introduction of GST, and request that you review the details and approach your advisors to assist you in deciding on the best method for passing the decrease in your prices along to us as one of your customers. 

This is because the government expects that the “pre-GST” price of many goods and services should decrease due to the abolition of sales tax and service tax.  These are currently a cost to you, either directly, or in the cost of goods and services supplied to you by your suppliers.  However, as GST registered personsare allowed to claim any GST charged to them as an input tax credit, it should not be a cost of doing business.

To assist in ensuring that pricing of goods and services is reduced, the Malaysian Government has taken steps and put in place strict measures to ensure all traders do not take advantage from the implementation of GST by increasing the price of goods or services in order to make excessive profits.

These measures include the Price Control and Anti-Profiteering (Act 723) in 2011 which provides that prices displayed by you should be inclusive of the GST amount, all other government taxes or duties and other charges.

In addition, the Ministry of Domestic Trade may appoint a Price Controller (at any time) to monitor the pricing and penalty will be imposed (RM500,000 for corporate; and RM100,000 or imprisonment for a term not exceeding 3 years or both for individual) to the company which found to be profiteering.

The Government also expects that businesses will be able to justify, in specific terms, any changes in prices resulting from the implementation of GST.

 At Wavelet Solutions Sdn Bhd, we expect that not only will you not increase your prices as a result of the implementation of GST, but that you will take account of the fact that you and your suppliers no longer have to pay either sales tax, or services tax that you are not currently able to recover. 

We further expect that you will pass on those savings to us in the form of a reduction in your current pricing before GST.  As we will be able to recover the GST that you charge us, this will mean that the cost of your goods to us should therefore be less than is currently the case. 

In addition to the above, we request that your company supply us with details of your proposed post-GST prices (indicating the extent of price reductions being passed on). This is necessary to allow us to plan for the implementation of GST. We would appreciate a response by 31st December 2014.

Be Prepared to issue Compliant Documentation

As part of the New Tax system, for any goods or services delivered from 1 April 2015, we will also require a complying tax invoice that includes your GST identification number to be issued to us by your company with any supplies to be made to Wavelet Solutions Sdn. Bhd. Any documentation that does not comply with all the requirements for it to be a tax invoice will result in delays to payment being made for goods or services that have been supplied. Please confirm that you are currently undertaking a process that will enable you to address the issues that we have identified above, and that you will be able to comply with the requirements to operate within the GST requirements by 1 April 2015.  If we do not receive confirmation of this by 10 December 2014, we may need to investigate sourcing the goods and services that you currently supply to us from potential Vendors that can give us the assurances that we require.

If you have any queries in relation to this request, please contact +6017 500 6824/ +6017 592 1115.

Yours sincerely,

Wavelet Solution Shd Bhd

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