LHDN yet to refund RM3.8 bil in excess tax payments

The Auditor-General’s Report says tax refunds were delayed partly due to LHDN’s failure to abide by its Refund First Audit Later policy.

PETALING JAYA: The Inland Revenue Board (LHDN) has yet to refund RM3.8 billion in excess tax payments for the assessment year of 2017 and earlier, partly due to its failure to follow its own refund policy.

The Auditor-General’s Report 2019 Series 1 today revealed that the delay had seen LHDN pay RM38.29 million in compensation for 135,960 cases from 2013 to 2019.

Stating that the compensation amount will continue to increase as long as the tax refunds are not settled within the stipulated period, the report pointed out that the delayed refunds were partly due to the agency’s failure to abide by its Refund First Audit Later (ReFAL) policy.

The report noted that while LHDN was given a RM5.5 billion allocation from the finance ministry for refunds for the 2017 assessment year, the agency used the money to offset refunds for 2019 instead.

“(LHDN should) use federal allocations to fully offset tax refunds for the respective assessment years – the 2017 assessment year and prior to that,” recommended the report.

“It should also carry out its ReFAL policy and refund taxes during the allocated period so as to prevent compensation for late (payments).”

LHDN, meanwhile, said the amount of refunds that was prepared differed from the balance in the current ledger. As a result, the refunds were not approved automatically and the cases had to be referred to the LHDN branches.

Cases that are still in the audit stage and not updated taxpayer information were other reasons LHDN said it was unable to make the refunds.