This article first appeared in The Edge Financial Daily on September 4, 2018

PUTRAJAYA: Finance Minister Lim Guan Eng has given assurance that companies would receive goods and services tax (GST) refunds although some RM19 billion has gone missing from the GST Refunds Trust Account.

“Let me say this, companies don’t have to go [to the government] and ask for refunds. You don’t have to worry about not getting back your money,” Guan Eng told a press conference yesterday.

However, the finance minister did not reveal the details on how the federal government would raise such a big sum for the GST refunds to business operators, some of whom have started to feel the heat of tighter cash flow caused by the delay in tax refunds.

Some 121,429 companies are affected by the late GST refunds by the government. These companies are collectively owed some RM19.4 billion in GST refunds by the government for the period between 2015 and May 2018. Guan Eng had earlier said the refund will be paid starting next year.

Organisations like the Federation of Malaysian Manufacturers have urged the government not to offset GST refunds owed to companies with sales and services tax (SST) payments that they are required to make to the government.

On that matter, Guan Eng pointed out the government cannot implement any mechanism to offset outstanding GST payments owed by companies to the government with future SST payments.

“These are two different systems, established under different laws and Acts of Parliament. So unfortunately we cannot do the offset [mechanism],” said Guan Eng.

However, companies which are unable to make necessary payments to the government because of tight cash flow — particularly due to late GST input tax refunds — may be exempted from related penalties, according to Guan Eng.

“We are considering, for example, if there are penalties due [from the companies] on certain things [to the government] we can consider waiving penalties.

“But [GST-SST] offset [mechanism] is not in our consideration,” he explained.