A-G's Report: LHDN yet to pay over RM3bil of tax refunds for assessment years of 2017 or earlier

PETALING JAYA: The Inland Revenue Board of Malaysia (LHDN) has yet to pay RM3.807bil of tax refunds for the assessment years of 2017 and before, says the 2019 Auditor-General’s Report.

The report said that the commitment to repay the delayed tax refunds has caused LHDN to bear late payment charges of RM38.29mil for 135,960 cases from 2013 to 2019.

According to the Auditor-General (A-G), a late payment compensation of 2% per day will be charged 90 days after submitting the form via e-filing and 120 days after manual submissions of tax returns.

The A-G said that on Jan 1,2019, the commitment of tax refunds was RM18.436bil.

The report added that in 2019, the Federal Government had set aside RM18bil for the purpose of settling the commitments of paying tax refunds.

The audit found that as at Dec 31,2019, there was a commitment of paying tax refunds of RM10.851bil to 1.26 million taxpayers.

Of that amount, RM3.807bil or 35.1% involved tax refunds for the years 2017 and prior, while RM7.044bil or 64.9% was for the years 2018 and 2019.

In response, LHDN said that the amount to pay refunds for the years 2017 and before took a long time because of several issues.

These included several cases that were still being audited or investigated, with LHDN saying that refunds could only be done once the audits were concluded.

The department added that several taxpayers had not updated their details for the refund process.

The A-G's Report also said that the Customs Department overpaid 75 Good and Services Tax (GST) refund claims by RM4.38mil.

Furthermore, 75 of the 100,736 GST refund claims audited were paid, although the applications were received past the due date of Dec 31,2018.

The audit was conducted from Feb 25 until April 30 of this year.

“The audit found this happened because the officers responsible did not check the date of receipt of the GST-03 statement, ” said the A-G.

In response, the Customs Department said that it was taking action to recover the sum of RM4.38mil, with almost RM800,000 involving 42 transaction bills concluded as at Aug 3.