GST refunds kept in consolidated revenue account violated trust laws — AG

This article first appeared in The Edge Financial Daily, on July 16, 2019.
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KUALA LUMPUR: Keeping RM19.4 billion in goods and services tax (GST) refunds in a consolidated revenue account violated fundamental trust laws and accounting requirements.

Attorney-General (AG) Tommy Thomas said this in a letter to the Public Accounts Committee (PAC) dated Oct 9, 2018, of which the content of the letter was attached in PAC’s report on the GST refunds that was released yesterday.

“The government’s practice to place GST revenue into a consolidated account violates Section 7 of the Financial Practices Act 1957 and Section 54 of the GST Act 2014,” said Thomas.

He explained that placing the GST refunds into the consolidated revenue fund appeared as a way to guarantee eligible taxpayers would get refunds.

“Opinions from the ministry of finance and the Royal Malaysian Customs said the placement of GST revenue into the consolidated revenue account is in line with Article 97 of the Federal Constitution. The attorney-general, however, stated such practice violated laws,” he said.

Thomas added that criminal liability regarding the breach of trust was not discussed as the issue is opened as a criminal matter by the police.