Do You Know GST Common Problem But Uncommon Risk

Welcome to series of GST educational posts -->Do You Know GST Common Problem But Uncommon Risk

As usual, this 5 minutes posts explain WHAT, WHY,  and HOW.

Do You Know GST Common Problem But Uncommon Risk

Wrong Tax Code & Key Entry Error

  1. Wrong Tax Code used & key entry problem --> Understated tax liability

    1. Capital goods – Should account as TX or TX – CG (6%) wrongly account as NR (0%)
    2. TX (6%, Ex – petty cash purchased; handphone bills, etc) wrongly account as OP (0%)
    3. BL (6%; non-claimable) wrongly account as TX (6%; claimable)
    4. Omitted to account for DS (6%; deemed taxable supply)

2. Key Entry Without Supporting Details - Could understated tax liability

  1. Omitted to key in import custom form / K1 number
  2. Omitted to key in export custom form / K8 number
  3. Omitted to key in supplier Business Registration Number (BRN) or GST number

3. Wrong Tax Code & Key Entry errors

  1. RP  or Relief Supply (petrol, diesel, etc.; 0%) --> account as OP (out of scope supply; 0%)
  2. EP or exempt supply (0%, Exe – residential property rental) -->account as OP (out of scope supply; 0%)
  3. IES / ES43  or Incidental Exempt Supply (0%, Exe – interest income; gain / (loss) in foreign exchange) --> account as OP (out of scope supply; 0%)
  4. DATE field  (column) --> Key in invalid value (currency, numeric, alphanumeric)
  5. VALUE field (column) --> Key in invalid value (date, alphanumeric)
  6. Key in invalid character --> “,” ; “|” ;
  7. Omitted to key in Country code in Country field
  8. Foreign currency code --> Not tally with ISO currency code
  9. Data key into wrong column --> BRN key into invoice number column
  10. Ledger record type (payment entry) --> Key into Purchase (P) record type
  11. Ledger record type (journal entry) --> Key into Purchase (P) record type

4) GST Common Problem - GST Mapping Exercise

Mapping  between chart of account & GST tax code, is a planning & coordination step to minimize GST error.

The Comon Problem --> Mapping Exercise is not management priority

GST Common Problem But Uncommon Risk

Recommended Best Practice

Coordinate proactive annual review (minimun)

The exercise should engage the business owner, management and support staff (i.e. Accounting, HR, Marketing, etc.)

The benefit of such a official GST discussion,

  • Enable quality cooperation between everyone and every process.
  • Agreed counter measure to reduce the top 5 key entry error
  • Latest GST requirement will be share and so work SOP adapt in due course

For additioanl details, please read GST annual certification checklist

To arrest the wrong Tax Code & Key Entry Error

  • To conduct check, identify and ratify these mistake is necessary to prevent submision of wrong GST 3 return
  • Automated audit tool designed to chec, filter and report you GST 3 return mistake
  • So you have time to correct your GST return, and only submit the quality GST return

For additional information, please read GST Health Test Report

 

Do You Know GST Common Problem But Uncommon risk -

What is the Uncommon Risk?

Do You Know GST Common Problem But Uncommon Risk
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The risk include

  • Fine up to RM50K
  • Penalty up to 2 times of tax understated
  • Imprisonment for a term up to 3 years

Detail information, please go to this post The top 7 GST risk

 

If you have any question about this posts, feel free to contact S.B. Lim at gstconsult@gstconsult.com.my / 019.9199149 

Thank you for reading

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