An exploratory study on GST compliance time costs of SMEs in the northern region of Malaysia

The Malaysia government is always committed in making tax system more effective, efficient, comprehensive, transparent, fair and friendly to users. Thus goods and services tax system (GST) has been implemented in Malaysia since 1 April 2015 to replace the former sales and services tax (SST) system. As such, procedural issues and compliance cost associated with the GST system are of significant interest to the taxpayers. This study is conducted one year after GST system implementation which considered as at the early stage of GST implementation. It focuses on the compliance time cost in terms of the time spent by the Small and Medium Enterprises (SMEs). The respondents of this study are the SMEs in the Northern Region of Malaysia i.e. Penang, Kedah, and Perlis. The result reveals that record keeping contributes to the major increase by percentage in GST compliance time costs followed by learning new GST systems, answering RMCD queries, claiming GST refund and GST payment process. This study also discovers that the demographic background of the SMEs indicates different of opinion in compliance time costs. While GST law complexity and time frequency of GST filing are among the main causes for the increase in compliance time costs of GST for SMEs under this stud