KUALA LUMPUR: Datuk Seri Rafizi Ramli has questioned whether the government has “overstated” its revenue collection by including unpaid tax refund owed to taxpayers, which he claimed has reached a staggering RM33bil at a certain point.
“According to the Federal Government Financial Statements, commitments for tax refunds have increased sharply from RM14.6bil to RM33.3bil (in 2024).
"Based on this trend, outstanding tax refunds for 2025 are very likely to be significantly higher,” said Rafizi (PH-Pandan) when debating the motion of thanks on the Royal Address in the Dewan Rakyat on Monday (Jan 26).
"The question, therefore, is why taxes that were over-collected have not been returned to the public and to companies? Is this due to delays in processing, a shortage of manpower, insufficient time for assessment, or other reasons?” he added.
He said the government has talked about having strong fiscal discipline, controlling expenditure, reducing corruption and successfully reducing our fiscal deficit year by year.
“However, when we consider the amount that has not been refunded, what would the true fiscal deficit be if these refunds were properly paid to the public?” he asked.
The former economy minister explained that the government practises cash accounting rather than accrual accounting.
“Under cash accounting, all revenue collected is declared as government revenue, even if it does not truly belong to the government and must later be refunded. Only when refunds are paid are they deducted. This differs from standard corporate accounting practices, where liabilities are set aside upfront,” he said.
"As a result, government revenue may be overstated. For example, government revenue for 2024 was declared to be RM322bil, as recorded in the Budget 2025 document. However, this figure includes RM33bil that does not constitute genuine government revenue, as it represents overpaid taxes that have not yet been refunded to the public.
"If these refunds were properly accounted for, the actual fiscal deficit for 2024 would be estimated at between 5.8% and 6%, compared with the 4.1% figure presented. This difference is substantial and has serious implications,” he added.
He questioned whether the failure to refund these taxes was due to administrative negligence or if it was a deliberate decision to present a stronger fiscal position by withholding tax refunds in order to reduce the reported deficit.
“This matter must be addressed by Parliament and will eventually be scrutinised by companies and financial markets alike. While such practices may technically be permissible under cash accounting, they raise serious concerns about transparency and financial governance,” he said.
He hoped that the Finance Ministry would explain the country’s true fiscal deficit position by taking into account the outstanding tax refunds owed to the public that are still being held by the government at present.
