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(Summary)

The Public Accounts Committee (PAC) confirms the GST law was broken and GST refunds that were not paid out to taxpayers were used for other purposes.

based on Malaysian finance minister, there was RM19.4 Billion worth of GST refunds left unpaid as of 31 May 2018 on parliament august 2018. taxpayers in Malaysia were shocked to find out that the Government had less than RM150 million in its Fund for GST Refunds to facilitate payment for GST refunds.

The unpaid refunds worth RM19.4 billion involved 121,429 companies that included among the biggest conglomerates in Malaysia, like Petronas, Shell and Tenaga Nasional Bhd (TNB).

When the GST was introduced in April 2015, all taxpayers had full confidence in the GST refund mechanism as it was well provided in the GST Act and Regulations.

According to the mechanism, all GST collections should be made directly into the Fund for GST Refunds to facilitate payment of refunds within 14 working days from the receipt of GST Return (GST-03) filed electronically (Chart 1).

GST collections were not deposited directly into the Fund for GST Refunds, and this had caused delays in GST refund payments for more than a year. Instead, the GST collections that were deposited directly in the Consolidated Revenue Account were used for other purposes by the previous government.

As stated by the Accountant General’s Department in the PAC report, the RM19.4 billion that was supposed to finance the relevant GST refunds was used by the previous government to fund its operating and development expenditures. This was despite the Royal Malaysian Customs Department admitting that RM19.4 billion had yet to the paid out due to insufficient fund in the Fund for GST Refunds.

Source : https://www.theedgemarkets.com/article/mof-pac-confirms-gst-law-broken-and-unpaid-taxpayer-refunds-used-other-purposes