KUALA LUMPUR (Aug 24): The Inland Revenue Board of Malaysia (IRB) said today that the previous government was informed of the shortfall in the Tax Refunds Trust Fund that resulted in the delay in refunding excess taxes paid for up to six years.

Applications, including written ones, had also been submitted during the monthly cash management committee meeting chaired by former Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar to request for additional allocation into the trust fund for the tax refunds, said IRB's chief executive officer Datuk Seri Sabin Samitah in a statement.

The shortage in the trust fund, which was not addressed, resulted in RM16.05 billion worth of excess taxes paid not refunded, he said, confirming the new government's Finance Minister Lim Guan Eng's revelation on Wednesday that the sum has yet to be returned to taxpayers.

He went on to say that the IRB will extend its full cooperation to the special police team that has been formed to investigate the issue.

Earlier today, the New Straits Times reported that the IRB is being investigated for criminal breach of trust, and that its sitting and past board members, including Mohd Irwan, are expected to be called in by the Commercial Crime Investigation Department to shed light on the billions of overpaid taxes that were not refunded.

Sabin explained that under the self assessment system that was implemented since 2001 for companies and since 2004 for non-companies, tax payers have to calculate the taxes to be paid and file the Income Tax Return Form and then pay the relevant taxes in the stipulated time frame.

Under the system, taxes are collected in advance, either via instalments or a scheduled monthly tax deduction. All taxes received will then be deposited into the Consolidated Account.

Excess taxes paid will occur when the amount of taxes paid in advance is more than the tax incurred as reported in the Income Tax Return Form. It is the responsibility of the Cash Management Committee to approve funds to be channeled to the Tax Refunds Trust Fund, he said.

Due to the shortage in the trust fund, Sabin said IRB has prioritised tax refunds to individual taxpayers. As of July 31, it has processed over 90% of tax refund applications from individual taxpayers. Refunds for other taxpayer categories could not be implemented because no additional provisions were transferred to the trust fund, said Sabin.

Tax payers can apply to offset refunds against tax to be paid for 2018

Moving forward, Sabin said taxpayers who have yet to be refunded for excess taxes paid may apply to set-off their tax payable for the current year. For this, taxpayers must apply for the set-off at the respective IRB branch that handles their tax files.

For those who don't apply for the set-off, the refunds will be processed depending on the allocation the Government approves for the trust fund, and the country's financial position.

"Given the financial constraints due to the Government debt level of more than RM1 trillion, Finance Minister Lim Guan Eng is looking for financial resources, to repay (the excess tax) either next year or the subsequent years," he added.