What is MyGCAP?
The Royal Malaysian Customs Department (RMCD) has just issued the General Guide on the Malaysia GST Compliance Assurance Programme (MyGCAP).
MYGCAP eligible to companies with an annual return of RM100million and above.
Then why got this programme , and what is the benefit for those companis?
MyGCAP aims to encourage voluntary compliance among businesses and at the same time encourage businesses to proactively adopt a robust tax risk management system. It achieves this by requiring participants to perform a full review of their internal compliance processes in accordance with guidelines set out by the Royal Malaysian Customs Department (RMCD). A report on the findings of the review will then need to be submitted to the RMCD for their review and sign-off.
In order to participate in MyGCAP, businesses must meet certain eligibility criteria and must receive specific approval from the RMCD. As of now, the RMCD has not released any information on the eligibility criteria or the process for applying. We understand that the initial phase is likely to cover only Public Listed Corporations, Government Linked Corporations and companies with a turnover of over RM100 million, but more details are expected in the coming months.
However, we anticipate that after the initial phase, there will be a wider roll-out of the programme and more companies would be encouraged to participate.
Businesses who successfully complete their reviews with RMCD will then be recognized with a number of concessions and benefits which we discuss further below.
This programme is beneficial to Public Listed Corporations (PLC), Government Linked Corporations (GLC) or companies with an annual turnover of RM100 million and above.
It is understood that for PLC’s, only the actual listed entity will be eligible and not the subsidiaries of the PLC, unless they form part of a GST Group Registration.
The benefits :
Businesses successfully granted MyGCAP status will enjoy specified benefits for a period of 4 years from the approval date. A key benefit is according a waiver of penalties for voluntary disclosures of non-fraudulent errors detected under the MyGCAP Review that will be considered based on the merits of each case.The other specified benefits are:
(i) Expeditious GST refunds;
(ii) Auto renewal of Special Schemes;
(iii) Step-down of RMCD compliance activities and GST Audits unless significant anomalies or irregularities are noted in GST returns;
(iv) A dedicated team of ‘Subject Matter Experts’(SMEs) to assist and resolve GST issues expeditiously.
The review must be conducted by an independent third party who has received accreditation from the RMCD to conduct such reviews. We understand at this stage, it is not possible for a business to undertake a ‘self-review’ and a third party needs to be appointed to perform this work.
As of now, further details have not been released on how to obtain accreditation, but we understand that a course will be launched in the coming months. Applicants that successfully complete the course will be given accreditation which is expected to be in addition to the current GST Tax Agent Licence accreditation.
GST Reviews can come in a variety of shapes or forms depending on the extent of the review and the risk areas that are the focus of the review. MyGCAP, however, is intended to be a standardised and comprehensive review of the business with a greater emphasis on GST processes and controls. Based on the RMCD’s expectation that these reviews would take approximately 6 months, it is likely to be more comprehensive than reviews that have typically been conducted previously.
However, the most critical differences are that the parameters of the review are set by the RMCD and will be subject to their scrutiny and approval, and that the review can only be carried out by an accredited independent third party.