Federal audit: Malaysia’s taxman still owes RM3.8b in refunds from 2017 and earlier

The Inland Revenue Board has yet to refund RM3.8 billion in excess tax payments from assessment years before 2018. — Picture by Hari Anggara
The Inland Revenue Board has yet to refund RM3.8 billion in excess tax payments from assessment years before 2018. — Picture by Hari Anggara

KUALA LUMPUR, Aug 24 — The Inland Revenue Board (LHDN) has yet to refund RM3.8 billion in excess tax payments from assessment years before 2018, the 2019 Auditor-General’s Report (Series One) revealed today.

The report said this delay has already resulted in the agency paying RM38.29 million in compensation in 135,960 cases between 2013 and last year.

“The amount of this compensation will continue to increase as long as the tax refunds are not settled within the stipulated period,” the report read.

Among others, it said the delayed refunds were a result of the LHDN’s failure to abide by its own Refund First Audit Later (ReFAL) policy.

The NAD further noted that the tax agency did not adhere to an internal memo that directed it to prioritise refunds for the 2017 assessment year and those prior when it was given a RM5.5 billion allocation from the Finance Ministry.

Instead, the LHDN chose to use the amount to offset refunds for 2019.

In its recommendations, the department also directed the LHDN to fully use federal allocations to offset tax refunds for the respective assessment year and to adhere to its ReFal policy.

The LHDN sought to explain the delay by citing discrepancies that triggered the need for additional audits that preclude the affected cases from receiving automatic refunds as well as outdated taxpayer information.

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