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Home FAQ Anti-profiteering

A. DEFINITION

1. What is meant by “Profiteering”?

Making a high unreasonable profits.

2. Is the act of increasing the price by traders is considered as profiteering?

No, not necessarily, because the offence of profiteering is by the increment of net profit margin of goods or services offered compared to profit on the base date.

B. ANTI-PROFITEERING MECHANISMS

3. What are the regulations for determining whether a trader can be considered as profiteering?

The Regulations of the Price Control and Anti-Profiteering (Mechanism To Determine Unreasonably High Profits for Goods) (Net Profit Margin) 2014.

4. What is the mechanism used by the Price Control and Anti- Profiteering (Mechanism to Determine Unreasonably High Profits for Goods) (Net Profit Margin) 2014 in order to determine the offence of Anti-Profiteering?

The Mechanism used is by making it compulsory for traders to maintain the net margin for a certain period of time as set forth in the Regulations.

5. How long traders need to maintain the profit of the net margin?

18 months. Starting from 2nd January 2015 until 30th Jun 2016.

6. How profiteering can happen and what is the formula to determine the net profit margin?

Profiteering occurs when the current net profit margin of 2nd January 2015 to 30th June 2016 (X1) exceeds the base net profit margin (X0) set on 1st January 2015 or on the other dates according to certain circumstances as stipulated in the Regulation of the Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profits for Goods) (Net Profit Margin) 2014.

7. What is the reason for 1st January 2015 become the basic comparison of the prices?

The date mentioned is 3 months before the enforcement of GST on 1st April 2015. Profit made by that date is believed to be stable until 1st April 2015.

8. What are the elements used in the calculation of the net profit margin?

The calculation of the net profit margin for goods and services are based on the elements of sale price, the cost of the goods or services, operational cost, input tax, output tax, as well as return of sales tax as explained and enforced in the Regulation of the Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profits for Goods) (Net Profit Margin) 2014

9. Is the increment of one cent in the net profit margin is considered as profiteering?

Yes. Based on the Regulation of the Price Control and Anti Profiteering (Mechanism to Determine Unreasonably High Profits for Goods) (Net Profit Margin) 2014, as long as the net profit margin after 1st April 2015 exceeds the net profit margin on 1st January 2015, it is considered as profiteering.

10. If the traders is holding a sale, what are the basic price that will be used in the calculation of net profit margin?

Basic price used is the last price before the sale takes place.

11. If the trader is offering a new item, what is the basic price that the trader need to use?

Basic price that shall be used for new item is the selling price for the first time. If the new item is sold with introductory price, the basic price that shall be used is the normal price of that item after the introductory price.

12. If a new business is operating after 1st April 2015, what is the basic price that should be used?

If a new business is operating after 1st April 2015, the basic price is to be based on the first day of the business operation.

13. Does profiteering activities occur only at the level of retailing?

No, it covers all levels of business including importers, manufacturers, wholesalers, distributors and retailers

14. By controlling the unreasonable profiteering, is KPDNHEP indirectly stopping the traders from increasing the price?

Basically, KPDNHEP does not stop traders from increasing the price of goods if it is justified. However, traders are asked to offer reasonable price to ease the burden of the consumers.

15. If the cost of the goods or services or operational cost increase, can traders increase the price of goods and services?

Yes traders can increase the price provided that the price increment is parallel with the increment of cost. However, the current net margin cannot exceed the net margin profit that has been set forth.

16. Are non-registered GST traders also monitored on the net profit margin under the Regulation of the Price Control and Anti- Profiteering (Mechanism to Determine Unreasonably High Profits for Goods) (Net Profit Margin) 2014?

Yes, every levels of businesses whether registered or not will be monitored under the Regulations.

17. Is it considered as an offence if traders include the element of input tax in the price determination?

Yes, it is an offense under section 10A of the Price Control and Anti- Profiteering Act 2011. Based on Section 10A, any credit for input tax on output tax shall be withdrawn from the price determination.

C. BUSINESS DOCUMENT

18. How long is the storage period for a record on business operations?

In accordance to subsection 53A (2) of the Price Control and AntiProfiteering Act 2011, all business records need to be kept and maintained for seven (7) years from the last date of the records.

19. Does KPDNHEP has any right to take action against traders who did not have the record of their business operations?

Yes, KPDNHEP may take action against the traders. This is because under section 53A of the Price Control and Anti-Profiteering Act 2011, it requires traders to keep and maintain records in relation to their business operations.

20. What is the penalty for individual who fail to produce the record of business operation?

For the first offence, a fine not exceeding RM50, 000.00 or imprisonment not exceeding 2 years or both. For the second and subsequent offence, a fine not exceeding RM100, 000.00 or imprisonment not exceeding 5 years or both. This is in line with the penalty provisions in paragraph 57 (b) of the Price Control and AntiProfiteering Act 2011.

21. What is the importance of Section 21 Notice under the Price Control and Anti-Profiteering Acts 2011?

The Notice under the Price Control and Anti-Profiteering Acts 2011 is the written notice that directs any people to produce information, document or statements in various forms within the specified period given by the Assistant Controller. This notice is important for investigation purposes of any offences under the Act. Failure to provide notice under section 21 is an offence under the Act and is punishable according to section 57 Act

D. PRICE MARKING

22. Are there any relatable legislations that can be used to protect the consumers?

Yes, they are many. For instance, Consumer Protection Act 1999, the Price Control and Anti-Profiteering Act 2011 and the Control of Supplies Act 1961.

23. Are there any specific legislations on price marking to ensure that consumers will not easily deceives?

Price Control Order (Price Marking by Retail Sellers) 1993 [P.U. (A) 137/1993] under the Price Control and Anti-Profiteering Act 2011 layout that each goods displayed for sale purposes shall be priced.

24. Is it necessary for the price markers that have been placed on the goods, include the goods and services tax (GST) on 1 April 2015?

On 1st April 2015, the price markers shown must be included with GST. However, exemption period for 14 days (starting 1st April until 14th April 2015) is given to traders for the price markers before and after GST adjusting purposes.

E. ROLE AND RESPONSIBILITY

25. What are the roles of KPDNHEP in the implementation of GST?

The roles of KPDNHEP is to ensure that traders are not manipulating the price and making unreasonably high profit with the excuse of implementation of the GST.

26. What is meant by the OPS CATUT (OPS Profiteering)?

OPS CATUT is an operation to ensure traders are complying with the reasonable profit taking in line with the Price Control and AntiProfiteering Act 2011.

27. Do monitoring every businesses networks conducted by KPDNHEP?

Yes.

28. What are the action taken by KPDNHEP enforcers to ensure that traders do not make any unreasonable high profit after 1st April 2015?

KPDNHEP enforcers will increase the enforcement through monitoring, operation and taking legal action towards traders who committed offences.

29. What will happen after the period of 18 months of instruction to keep the net profit margin ends? What if the price increases after that?

The government will review it back once the period ends.

30. Trader always use GST as an excuse to increase the price of goods or services. What are the action taken by KPDNHEP in order to handle this issue?

If traders increase the price without any reasonable excuses and only for the sake of taking advantage on the implementation of GST, KPDNHEP will take strict action towards them under the Price Control and Anti-Profiteering Act 2011.

31. What are the basis of enforcement action under OPS CATUT (OPS Profiteering)?

The basis of enforcement action is when there is a price increment for the same goods detailing from the date the base net profit margin is set.

32. What are the advocacy measures that have been taken to ensure the Price Control and Anti-Profiteering Act 2011 is adhered during the implementation of GST?

The advocacy measure that has been conducted is by the dissemination of information to consumers and traders in relation to the Price Control and Anti-Profiteering Act 2011.

33. What are the roles of traders in determining the price of goods and charges for services under the Price Control and AntiProfiteering Act 2011?

In determining the price of good and charges for services, traders must ensure price that is charged does not include any element of claimed tax.

34. Will the price of goods drop with the enforcement measure taken by KPDNHEP?

Enforcement act taken by KPDNHEP is one of the way to ensure that traders do not profiteering. There is no guarantee that price will drop since the price of a goods depend on various factors.

F. COMPLAINTS CHANNEL & PRICE REVIEW

35. How can the customers make complaints about the increase in price?

Any complaint can be made through the Call Centre at 1-800-886- 800 or through eAduan System that can be easily accessible through this link http://eaduan.kpdnhep.gov.my Other than that, complaints can also be made at KPDNHEP headquarters and any branch worldwide.

36. What are the evidence needed to make a complaint?

Submission of the purchasing receipt or any related documents.

37. Can the complaint be made verbally without any purchasing document?

Document is needed for it to be the evidence/statement for an investigation. However, verbal complaint will be investigated as well and suitable action will be made afterwards.

38. What are the facilities provided by KPDNHEP for the public?

KPDNHEP has provided the mobile application (Mobile Apps) known as MyKiraGST. This application allows users to review the prices of goods according to certain areas. If the price exceeds the maximum price, the complaint can be made online. MyKiraGST can also be accessed through this link http://mykiragst.kpdnhep.gov.my .

39. How can consumers obtain information on the price of goods and services?

Consumers can obtain the information on price of goods and services through the sources like User Price Guide that can be downloaded from KPDNHEP website.

40. Price or charge imposed not to include certain items

  1. Any person who supplies or offers to supply any goods or services shall not include the items as specified in the Schedule as part of the price of the goods or charge for the services.
  2. Any person who fails to comply with subsection (1) commits an offence and shall, on conviction,
    be liable –
    1. where such person is a body corporate, to a fine not exceeding five hundred thousand ringgit and, for a second or subsequent offence, to affine not exceeding one million ringgit; or
    2. where such person is not a body corporate , to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding there years or to both and, for second or subsequent offence, to a fine not exceeding two hundred and fifty thousand ringgit or imprisonment for a term not exceeding five years or both .

41. Mechanism to Determine the Unreasonably High Profits

  1. The Minister shall prescribe the mechanism to determine that profit is unreasonably high and different types of mechanism may be prescribed to cater for different conditions and circumstances as the Minister deems fit.
    1. The mechanism to determine the unreasonably high profit referred in the subsection (1) is includes the Minister determining a certain period during which there shall be no increase in the net profit margin of any goods or services.
  2. In formulating the mechanism under subsection (1), the Minister may take into consideration the following matters:
    1. any tax imposition;
    2. the supplier’s cost;
      1. any cost incurred in the course or furtherance of business
    3. supply and demand conditions;
    4. the conditions and circumstances of geographical or product market; or
    5. any other relevant matters in relation to the prices of goods or charges
      for services.

42. Duty to keep records

  1. Any person who supplies or offers to supply any goods or services shall keep and maintain proper records relating to the business operation including the following records:
    1. Sales records including receipts and sales books;
    2. Purchases records including invoices from suppliers;
    3. Expenses records including payment records, invoices and
      particulars of acquisitions;
    4. Documents relating to the determination of pricing for the goods or
      services;
    5. Records of remunerations, allowances or wages; and
    6. Tax records and any related documents, if any.
  2. The records under subsection (1) shall be—
    1. preserved for a period of seven years from the latest date to which the record relates;
    2. available at all times for examination by the Assistant Controller; and
    3. kept up to date and in good order and condition.
  3. Any person who fails to comply with subsection (1) or (2) commits an offence.

43. Penalty

  1. Any person who commits any offence under Part III or Part IV shall, on conviction, be liable—
    1. where such person is a body corporate, to a fine not exceeding five hundred thousand ringgit and, for a second or subsequent offence, to a fine not exceeding one million ringgit; or
    2. where such person is not a body corporate, to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding three years or to both and, for a second or subsequent offence, to a fine not exceeding two hundred and fifty thousand ringgit or to imprisonment for a term not exceeding five years or to both.

44. General penalty

  1. Any person guilty of an offence under this Act for which no penalty is expressly provided shall, on conviction, be liable—
    1. if such person is a body corporate, to a fine not exceeding one hundred thousand ringgit, and for a second or subsequent offence, to a fine not exceeding two hundred and fifty thousand ringgit; or
    2. if such person is not a body corporate, to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding two years or to both, and for a second or subsequent offence, to a fine not exceeding one hundred thousand ringgit or to imprisonment for a term not exceeding five years or to both.
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