If you are planning to expand your business into Malaysia, you are likely asking the question, What is SST?

SST refers to the Malaysian sales and service tax, where a sales tax is imposed at the manufacturer level, and a service tax is paid by consumers who are using taxable services.

Tax regulations are relatively fluid in Malaysia compared to neighbouring regions, which can make compliance challenging to maintain. This is why many growing businesses partner with a corporate services team who can help them navigate multi-country taxes as they evolve.

Read on as BoardRoom’s Tax Director for Malaysia, Cheong Woon Chee, provides an overview of how SST works and what you can do to ensure compliance.

Microsoft’s 2022 Work Trend Index shows 41% of the global workforce is likely to consider leaving their current employer within the next year. Dubbed globally as “The Great Resignation”, workers are looking for better conditions, more engaged teams and a greater sense of purpose.

At the same time, the cost of hiring is rising. The latest research has found the average cost of recruiting has doubled in some parts of the world. And it takes at least a week longer to recruit someone than it did 12 months ago.

In many cases, it has become harder – and more expensive – to find and hire new people than it is to retain your current employees.

With these figures in mind, the importance of employee engagement simply can’t be underestimated.

Setting up an ESOP can be a complex procedure. In Malaysia, there are specific rules and regulations as well as tax implications, so it’s important to get help from experienced professionals who understand the local landscape.

There are several administrative processes required to effectively implement and maintain an ESOP, including:

• offer management
• vesting management
• participant information record-keeping
• participant liaison regarding plan mechanisms
• leave management
• regulatory reporting.

Other important considerations to think about are:

• How long it takes for an individual’s share to be supplied to them over the course of their employment.
• How long an employee needs to stay before the ESOP ‘kicks in’. Also known as the “cliff” or “lock-in” time, it’s important to consider how much equity to give early employees in case they leave with your shares in hand without adding significant value to your organisation.

Of course, an ESOP is not the only option for offering employees equity in your company.

Other options include:

• performance share plan (PSP)
• restricted share plan (RSP)
• share appreciation rights plan (SARP)
• phantom share plan.

To figure out which is right for your company, you’ll need the help of trusted professionals to examine different setups and scenarios before going ahead.

Incentivising your employees with ESOPs is an effective way to boost engagement and productivity. But it is not without its complexities, especially if your presence stretches across the Asia-Pacific or globally.

And with the trend of remote and hybrid working looking set to continue, who knows how far and wide your people could reach?

Each country will have different regulations and options for offering ESOPs, so it’s important to partner with someone who understands the intricacies of local regulations to ensure you are compliant.

Just as there are many benefits of consolidating multinational taxes with one agency, there are benefits to consolidating your employee stock options across multiple jurisdictions.

These include:

• Mitigating risk: having a team of professionals that understands not only Malaysia’s laws but those across the entire Asia-Pacific region can help your business mitigate risk when it comes to offering equity.
• Improving employee experience: streamline your correspondence with a share management platform that provides timely and clear communication, in multiple currencies and languages, across the region. This ensures everyone on the team, globally, has the same level of access, understanding and experience of the information at hand.
• Reducing administrative burden: implement efficient, automated processes and a single point of contact to ensure you receive clear and consistent communication across your locations.

At BoardRoom, we use leading technologies and a panel of experts to guide you through implementing and administering your ESOP. Our team of experienced professionals have in-depth knowledge of the local Malaysia regulations, as well as regional and international experience.

Wherever your employees work, we’ll be able to support in the implementation and on-going administration of your employee stock option plan to ensure they remain engaged and loyal for the long term.

Speak to our team of experts today to get started on implementing an ESOP in your company.

Handling tax and accounting in-house is not easy for any business. Errors in these processes can have severe consequences, so they need to be executed with exceptional accuracy and skill. Multinational companies in the Asia-Pacific region face the additional challenge of navigating the complex rules and regulations of each jurisdiction they operate in.

Deloitte’s 2021 Asia Pacific Tax Complexity Survey revealed 80% of respondents felt the region’s tax regimes have become more complicated since 2018.

If given the choice, many tax and accounting executives would engage an international company taxation and tax planning advisor in Malaysia, Singapore, Hong Kong or China to handle all their accounts locally. But this gold standard isn’t the reality for most businesses, especially when they are new to expansion.

Often, businesses will engage an additional tax firm to handle local regulatory requirements each time they expand to a new region. It is an understandable approach – specialist firms are able to offer in-depth knowledge of local tax laws. The issue is that collaborating with multiple firms can present its own challenges.

Many tax executives in multi-country companies end up struggling with:

• Tax treaties and implications: difficulty understanding statutory and regulatory compliance resulting in penalty and delay.
• Communication issues: language and cultural variations can make fostering collaboration between separate tax service providers challenging.
• Staff retention: the great resignation is happening, so there are more new hires to onboard and train.
• Technology issues: technological systems and communication modes vary from country to country, which can cause issues during cross-border dealings.

Do these challenges sound familiar? If so, the solution may lie in consolidating your taxes with an international business tax advisory service in Malaysia, Singapore, Hong Kong or China. Wherever your business is centralised, a third-party advisor will be able to help administer your tax functions across the Asia-Pacific region via a single point of contact.

This article explores the advantages of consolidating your taxes with one firm and provides tips on selecting a suitable provider for your company.

Governments across the Asia-Pacific region frequently set new laws and regulations, which means businesses must keep up with local tax environments as they evolve. This is particularly important when it comes to cross-border tax implications and treaties.

Outsourcing your taxes to a highly trained team will make it easier to navigate local requirements and manage your cross-border dealings successfully.

Malaysia’s tax system is particularly complex. Consider the Sales and Service Tax (SST), for example, which has replaced Malaysia’s GST. The SST has a fixed rate of 6% for service tax, and a variable rate between 5-10% for sales tax. Understanding your company’s requirements and having an expert advisor at hand can make all the difference when maintaining tax compliance.

When reporting season arrives, you can expect to leverage any and all tax benefits and incentives available to you when you have outsourced your accounting and compliance services to the same team that is handling your taxes. It can be easy to overlook tax breaks and exemptions if you do not have local expertise.

If your organisation operates in Malaysia only, you may be able to manage your taxes internally. But, for peace of mind that your multi-country business is operating with efficiency and integrity, you need to select a knowledgeable tax partner in Malaysia that has strong relationships in neighbouring countries.

Before engaging a tax advisor, ask them whether you will be assigned a dedicated contact person or need to interact with people in different countries. The second scenario should be avoided, as you would face all the same challenges that in-house tax management brings and gain little benefit.

An ideal arrangement would have you communicating with a connected network of tax professionals via one point of contact. In this situation, you benefit from a wealth of tax experience without the difficulties of coordinating internal personnel.

The benefits of partnering and consolidating with a premium service provider can also offer great financial rewards.

Organising today’s tax management is vital, but any executive knows that future planning is just as crucial for business success.

If you are already a multi-country organisation with offices within the Asia-Pacific region, you may be thinking about further expansion. As you grow, you will have more legislative and cultural challenges to deal with.

This is why global capabilities are a must when it comes to choosing a skilled tax advisory firm.

For instance, BoardRoom partners with Andersen Global, a network of legal and tax experts based in 315 locations around the world. This means we possess outstanding knowledge of cross-border business taxation matters.

Essentially, outsourcing your taxes to a global firm ensures you have all the specialist legal advice you need to expand into new countries and find success within them.

When selecting a tax partner, it is a good idea to ask whether they can provide additional corporate advisory and management services.

Successful business growth requires the proficient handling of business functions related to tax compliance, such as company incorporation and corporate secretarial services.

Engaging an advisory firm that provides a full suite of company services will support a simpler expansion process. You will save money and time, meaning you can direct more resources into your business’s primary objectives.

Efficiency tends to become more crucial the larger your company becomes.