By Ranjit Singh
SOME RM7.8 bil in Goods and Services Tax (GST) refunds have yet to be paid to taxpayers, according to news reports, and it would only be fair that the government pays interest on the delayed refunds to aggrieved taxpayers as compensation for the loss of usage of their money.
However, boutique tax advisory firm, Axcelasia Taxand Sdn Bhd chairman Dr Veerinderjeet Singh told FocusM that there was no provision in the law for the government to pay interest on delayed GST refunds.
“There is no provision in the law to pay interest on delayed refunds made by the Customs Department. The amounts due are all delayed as the Customs Department has not done its field audits on the amounts being claimed,” Veerinderjeet explained.
Although it seems unfair to the aggrieved taxpayers, he said it was not a question of what is fair or not as the law is silent on the matter.
That said, he believed that as a reform measure and to keep tax agencies on their toes, a provision to pay interest to the taxpayer for delayed refunds beyond a specific timeframe should be added into the law.
Recently, the Federation of Malaysian Manufacturers (FMM) urged the government to expedite outstanding GST refund payments to taxpayers as it severely affects their cash flow.
The FMM urged the authorities to only conduct a verification audit based on risk profile of the taxpayer to shorten the time to process the refunds instead of a field audit. The authorities have a period of six years to conduct the audit.
As at Feb 28, 2019, a total of RM4 bil in GST claims had been paid to 54,603 accounts registered with the Customs. The repayments were made possible after the government received the first tranche of special dividends of RM8 bil from state-owned oil company, Petroliam Nasional Bhd (Petronas) from a total of RM30 bil.
In March 2019, Finance Minister Lim Guan Eng claimed that the unpaid GST refunds stood at RM22.14 bil and not RM19.4 bil as earlier declared because there were additional claims made between May and December 2018.
However, the Public Account Committee (PAC) discovered that there was only RM1.5 bil in GST refunds due as of May 31, 2018.
The PAC also said RM9.6 bil of refunds were in review while RM3.9 bil were for non-taxable supplies, RM900 mil related to exemption issues and RM3.5 bil were being investigated.
The GST which was introduced in April 2015 was repealed in September 2018. Its abolishment formed part of the Pakatan Harapan election manifesto. – Feb 7, 2020
