Finance Minister Lim Guan Eng has revealed that the previous BN government had not paid more than RM16 billion in income and real property gains tax refunds, stretching back more than six years.

According to Lim, the outstanding refunds are owed by the Inland Revenue Board (IRB) to more than 1.6 million companies, individuals, societies and foundations. 

"Other than not returning the GST refunds, the previous government had also not refunded the excess income tax and real property gains tax paid by taxpayers totalling RM16.046 billion as of 31 May 2018," he said in a statement today.

Previously, Lim had claimed in the Dewan Rakyat that over RM19 billion in GST refunds had not been returned under the previous administration.

Shortage of funds

He explained that the outstanding amount of tax refunds is due to a drastic lack of funds in the Tax Refunds Trust Fund (TRTF).

"The huge amount of outstanding tax refunds is due to the shortage of transfers from the direct tax revenue collected to the TRTF.

"Tax refunds can only be made using the balance in the TRTF," he said.

Lim said that as of May 31 this year, the balance in the TRTF was RM1.486 billion – meaning a shortfall of RM14.56 billion, and 1.6 million taxpayers not receiving their tax refunds.

"It is clear that the RM14.56 billion not transferred from the consolidated fund to the TRTF had already been recognised as government revenue by the previous government.

"This means that the federal government revenue that was reported by the previous government is not accurate and larger than what it actually was," he said.

Lim added that the arrears are because the Finance Ministry's Cash Management Committee – which met monthly and was previously chaired by former Treasury secretary-general Mohd Irwan Serigar Abdullah – did not allocate enough money to the TRTF despite the IRB’s request for funds.

"As I have explained before, this amounts to the falsification of accounts and the misappropriation of tax refunds for other purposes or to conceal the actual deficit and present a surplus," Lim said.

IRB application

To relieve the taxpayers' burden, Lim said the new government had agreed to allow those with outstanding tax refunds from IRB to make an application to set off the amount against the tax payable for the current year.

The application needs to be submitted to the IRB to be considered for approval, he said.

"Besides that, the remaining tax refunds will be carried out based on the ability of the government depending on its fiscal position," Lim added.