Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (April 19): Tax reliefs have been commonly accorded to mega public infrastructure developments as a government incentive since the 1980s, the Royal Malaysian Customs Department asserted today, following the brouhaha over the granting of GST relief to the RM55 billion East Coast Rail Line project. 

Some of the past projects granted tax exemption to reduce the cost of construction in the period when the sales and services tax was in effect, include the construction of independent power plants (IPPs), the Stormwater Management And Road Tunnel (SMART Tunnel), Bukit Jalil National Stadium, Kuala Lumpur International Airport (KLIA), Express Rail Link (ERL) and Mass Rapid Transit (MRT). 

These ‘approved service projects’ not only benefitted from a sales tax relief, but import duties as well, customs director-general Datuk Seri Subromaniam Tholasy said at a media conference today. 

“As a government institution, we support [the tax relief]. Otherwise, the cost of the project will increase and the government will be forced to take more loans, which will further increase the national debt. Is this what those people want?” Subromaniam said in reference to individuals who have criticised the tax relief for its perceived favouritism.   

Although customs makes certain recommendations, Subromaniam said the final decision for government-approved service projects rests with the Ministry of Finance and is only granted to projects under the specific sectors of transportation, telecommunications and utilities.  

The goods and services tax relief granted to the ECRL project was aimed at benefitting state-owned Malaysia Rail Link Sdn Bhd (MRL) as the owner of the project, Subromaniam asserted, and not the overseas main contractor China Communications Construction Co Ltd (CCCC). 

As MRL benefits from the tax relief, the company would not be allowed GST refunds and it would also not be passing on any tax costs to consumers, he said.

“By granting the tax relief to the ECRL project, the government has actually made the best decision to benefit the people. This is a strategic project that is expected to be a gamechanger, connecting the states in the east coast and west coast in Port Klang,” Subromaniam added.

He said the tax relief was granted after taking into account the soft loan (and lower interest rates) granted by the Chinese Exim Bank to finance the project, although he did not clarify the estimated amount clawed back by the government as a result of the tax relief.   

Subromaniam also indicated Customs did not rule out using the recently gazetted Anti-Fake News Act to take action against people who he claimed had been spreading false news regarding the issue. “These are irresponsible people that have manipulated the facts to confuse the rakyat,” he added. 

Notwithstanding his explanations, there are some quarters that contend, such GST exemptions could send the wrong signals to investors as they create the impression of unfair competitive advantage.

      Print
      Text Size
      Share