This article first appeared in The Edge Financial Daily on January 29, 2019

KUALA LUMPUR: Businesses that have not yet received their goods and services tax (GST) refunds and want to claim their refunds in full are required to furnish the Royal Malaysian Customs Department with a bank guarantee.

However, the need for a bank guarantee to be furnished would depend on the amount of the GST refunds, said Customs director-general Datuk Seri Subromaniam Tholasy.

“There will be some control measures in place when [disbursing] the refunds, depending on the amount. Above a certain amount, we will retain some percentage, but this will not be much. The reason is that we would like to grant the refund in full only when the audit process is over,” he told a roomful of tax accountants at a panel discussion on sales tax, service tax and ongoing GST issues organised by KPMG Malaysia yesterday. He did not reveal the threshold for the need of a bank guarantee.

“However, there is an option available for refunds over that certain amount whereby we will grant a full refund as per your declaration, but [first, you must] give us a bank guarantee,” he added.

Subromaniam said the GST (Repeal) Act 2018 gives the Customs the authority to audit and make a claim for up to six years.

“So even though you get your refunds, you will still be subject to audit. However, for refunds below a certain amount, we will just rely on desk audit. There will be no field audit conducted,” he added.

It is understood that there are more than 170,000 companies that are currently waiting for their GST refunds.

“We have already started the refund process, [those entitled] will receive their refunds by the end of this year,” said Subromaniam.

Finance Minister Lim Guan Eng said during the tabling of Budget 2019 last year that a one-off special dividend of RM30 billion from Petroliam Nasional Bhd would go towards repaying the GST and income tax refunds of RM37 billion.