Govt might rake in billions after MyEG completes Online Tax Reporting project

PETALING JAYA: MyEG Services Bhd, one of the best-performing stocks last year, has finally landed the job to wire up businesses that are required to pay tax to the Government – a project that has been mooted to beef up the Government’s coffers.
The over-riding objective of the project is to plug a loophole that currently allows businesses, particularly entertainment outlets, to evade paying tax on sales to the Royal Malaysian Customs Department (Customs).
It is also to facilitate the Government’s implementation of the impending goods and services tax (GST) starting from April next year. The amount that the Government is losing out is not known, but the sum is estimated to run into the billions.
In an announcement yesterday, the company stated that it had been awarded a RM180mil contract by the Customs to undertake the Customs Online Tax Reporting (Electronic Monitoring System – EMS) project.
The tenure of the project is for a period of six years and will commence from April 1.
According to the statement, the project will entail linking up point-of-sales terminals and cash registers of businesses that are subject to the Customs’ tax collection.
“This will enable the Customs to effectively monitor tax collection revenue for the Government,” it said.
The project to wire up businesses has been shrouded in controversy, as there were several contenders for the job due to its lucrative returns.
Although the face value of the contract is small, it is seen as a prelude to the company generating more recurring income from the maintenance and supply of the equipment installed in the businesses.
MyEG had mooted the project several years ago and stated in previous reports that it had invested more than RM100mil in developing the system.
It finally made some headway in the project when it announced last month that it had completed a pilot Customs Service Tax monitoring system, cementing its position to win the job.
The pilot project was undertaken by MyEG Integrated Networks Sdn Bhd, a company where it has a 40% stake.
The announcement yesterday did not specify details on the company awarded the EMS project.
The euphoria surrounding MyEG picked up pace after Barisan Nasional was retained as the Government in last May’s general election.
Since May last year, the stock rose some 178%, making it easily one of the best performers for the year on Bursa Malaysia.
MyEG ended at RM2.89 yesterday, inching up nine sen.
The company is of the opinion that the project will contribute positively to its earnings for the financial years ending June 30, 2015 onwards.
The source of funding for the project is expected to be obtained from internally generated funds and bank borrowings.