KUALA LUMPUR, Aug 22 ― The Pakatan Harapan government has agreed to allow taxpayers with outstanding tax refunds from the Inland Revenue Board (IRB) to offset the amount against the tax payable for the current year, Finance Minister Lim Guan Eng announced today.
The offset application needs to be submitted to IRB for verification before approval while the remaining tax refunds will be carried out based on the government’s fiscal ability, the finance minister said in a statement.
Lim said the consideration was made following revelation that the previous Barisan Nasional (BN) government had allegedly failed to refund the excess income tax and real property gains tax paid by taxpayers, which totalled RM16.046 billion as of May 31, 2018.
“We hope that the failure to return RM16.046 billion of tax refunds is the last mega exposé related to the misappropriation and misuse of taxpayers’ money by the previous government.
“The new Pakatan Harapan government which upholds the principles of Competency, Accountability, and Transparency (CAT) will do its utmost best to resolve such scandals, including through returning the tax refunds,” he said in a statement.
The RM16.046 billion of outstanding tax refunds not returned by the Inland Revenue Board of Malaysia (IRB) involves a total 1,653,786 cases of companies, individuals, societies and foundations, Lim said.
The outstanding tax refunds stemmed from the shortage of transfers from the direct tax revenue collected to the Tax Refunds Trust Fund (TRTF), the minister alleged.
Tax refunds can only be made using the balance in the TRTF. As of 31 May 2018, the balance in the TRTF is only RM1.486 billion based on the records from the Accountant General’s Department, which Lim said is far lower compared to the RM16.046 billion required for the refunds that need to be made.
“In other words, there exists a shortfall of RM14.56 billion as of 31 May 2018 which resulted in 1,653,786 taxpayers not receiving their tax refunds as far back as more than 6 years ago.
“Therefore, it is clear that the RM14.56 billion not transferred from the Consolidated Funds to the TRTF had already been recognised as government revenue by the previous government,” he said.
The arrears in tax refunds is more than six years, Lim claimed.
The Cash Management Committee in the Ministry of Finance, which meets every month and chaired by the former Treasury Secretary-General Tan Sri Mohd Irwan Serigar, had failed to allocate enough money to the TRTF as requested by IRB, he alleged further.
The revelation came hot on the heels of allegations that the previous BN government had withheld GST input tax refunds totalling RM19.397 billion.
Lim, who made the accusation in the Dewan Rakyat earlier this month, said the previous Federal Government had failed to make the returns because of the shortchanged deposits into the GST Refunds Trust Account.
BN leaders, including former prime minister Datuk Seri Najib Razak, denied the allegation.