Non-payment of GST refunds needs finance minister’s nod

KUALA LUMPUR: Only the finance minister has the authority to extend the two weeks given to the Royal Customs Department to refund goods and services tax (GST) inputs paid by businesses.

Finance Minister Lim Guan Eng said this in a statement yesterday.

This also means that only the finance minister can authorise the decision not to transfer the RM19.25 billion, which is alleged to be missing, to the GST Refunds Trust Account.

He was responding to former prime minister Datuk Seri Najib Razak’s answer in the negative to his three questions earlier related to the RM19.25 billion that has yet to be refunded to businesses as the amount had not been transferred to the GST Refunds Trust Account by the previous administration.

“If the police believe Datuk Seri Najib Razak did not authorise it, then Tan Sri Dr Mohd Irwan Serigar Abdullah (pictured) will bear responsibility for the wrongdoing. It is not only a breach of trust but also abuse of a minister’s power.

“This is because only the finance minister can authorise for the RM19.25 billion not to be transferred to the GST Refunds Trust Account or not paying the GST refunds within two weeks as required by law,” Guan Eng’s statement read.

According to Guan Eng’s statement, Najib had said he was not aware nor was he involved in the previous government’s failure to repay the RM19.4 billion GST refunds since three years ago to 121,429 individuals and companies.

Guan Eng noted that Customs’ director-general Datuk Seri T Subromaniam had confirmed that his department had requested for the funds to be refunded via the monthly Trust Fund committee meetings chaired by then Treasury secretary-general Mohd Irwan since 2015.

“Unfortunately, the refunds were not made because there is only RM148.6 million left in the GST Refunds Trust Account when it should have RM19.4 billion, which means there is a shortfall of RM19.25 billion in the account,” Guan Eng said.

Despite this, Najib has said no to his three questions on this matter:

Firstly, whether Najib approved the decision not to pay the refunds within the two weeks as required by law.

Secondly, whether Najib approved the decision made by Mohd Irwan not to transfer the full amount of RM82.9 billion as requested by Customs, but instead had transferred only RM63.5 billion since 2015, resulting in a shortfall of RM19.25 billion in the GST Refunds Trust Account.

Thirdly, whether Najib gave the approval for the GST refunds not paid since 2015 to be considered as government revenue to be used as it wished.

“Will Najib say the same to the police when his statement is taken?” Guan Eng asked, adding that the police is now investigating the RM19.25 billion missing from the GST Refunds Trust Account under Section 409 of the Penal Code.

Guan Eng said the previous government had also failed to refund income tax and real property gains tax overpaid by taxpayers, amounting to RM16 billion as at May 31, 2018, involving 1,653,786 cases over the last six years.

This was confirmed by the Inland Revenue Board director-general Datuk Seri Sabin Samitah in a statement on Aug 24 where he said that the previous government was informed of the shortfall in the Tax Refunds Trust Fund that resulted in the delay in refunding excess taxes paid for up to six years.

Applications, including written ones, had also been submitted during the monthly cash management committee meeting chaired by Mohd Irwan to request for additional allocation to the trust fund for the tax refunds, said Sabin in the statement.

Guan Eng concluded his statement yesterday by asking whether Najib would plead ignorance on this matter as well.

This article first appeared in The Edge Financial Daily, on Aug 27, 2018.

For more stories, download EdgeProp.my pullout here for free.