KUALA LUMPUR: Datuk Seri Dr Wee Ka Siong (pic) is urging the government to ensure that income tax refunds are processed and credited within 30 days.
The Ayer Hitam MP questioning the lengthy delays that can stretch up to a year in some cases, adding that many complaints have been received about the Inland Revenue Board (LHDN) taking longer than the stipulated time frame to process refunds, despite guidelines stating refunds should be completed within 30 days of BE Form submission.
"In reality, many taxpayers are forced to wait three to six months and some even over a year, before receiving money that belongs to them," he told Parliament's Special Chambers on Monday (Nov 3).
"If the public is required to pay taxes promptly by strict deadlines, why does the government not show the same commitment in returning overpaid taxes to the people?
"These delays negatively affect household cash flow, especially as the cost of living rises," he said.
Dr Wee also highlighted discrepancies between LHDN's online portal and instructions given by branch officers, with many taxpayers repeatedly asked to resubmit supporting documents despite having provided all required information through the e-Filing system.
"This wastes time and effort and creates the impression that refunds are being intentionally delayed," he said.
He questioned the Finance Ministry's internal audit mechanism to monitor refund performance and the improvements made by the ministry.
"It is time we moved towards a fully automated straight-through processing system that allows refunds to be credited directly to taxpayers' accounts within a short period, except for cases that genuinely require further audit. With today's technology, technical excuses can no longer be accepted," he said.
Dr Wee urged the government to introduce a clear and binding service level agreement requiring all refunds to be processed within 30 days.
"The people have fulfilled their obligations as disciplined taxpayers. The government must, in turn, fulfil its responsibility transparently, fairly and promptly so public confidence in the national taxation system is not further eroded," he said.
In response, Deputy Finance Minister Lim Hui Ying said all refund transactions for individual taxpayers with no business income, for the Year of Assessment 2024, were approved within the stipulated 30 working days from the date of submission.
"Only a small number could not be approved within that timeframe due to the need for LHDN to conduct further verification of information submitted by taxpayers," she said.
Lim explained that LHDN processes refunds once the Income Tax Return Form is submitted. If submitted within the prescribed period and containing complete and accurate information, including bank account details for Electronic Fund Transfer (EFT), the current-year tax credit will be refunded within the stipulated period.
Approval and processing are subject to the Tax Refund Fund provisions and available allocations.
She added that LHDN is committed to ensuring refunds are made according to established procedures, implementing a "refund first, audit later" concept for current-year tax credits, with payments made automatically.
"Refunds may, however, be delayed if taxpayer information is incomplete or inaccurate, which requires additional checks and supporting documents.
"LHDN will contact taxpayers to inform them of this process and to obtain the required information.
"In some cases, LHDN has been unable to reach taxpayers because their contact details were not updated," she said.
Lim said LHDN's commitment to timely processing applies not only to current-year refunds but also to outstanding tax credits from previous years.
LHDN also has an internal audit mechanism and refund activities are subject to audit by the National Audit Department.
"As a form of accountability, where refund delays are not caused by taxpayers' errors, the government, under Section 111D of the Income Tax Act 1967, must pay compensation amounting to 2% of the tax amount refunded late," she said.
