[ad_1]
KUALA LUMPUR: The Internal Revenue Board (LHDN) was urged to adopt the concept of “refund first, audit later” (ReFAL), which is the process of allowing income tax to be paid first and then audited for the administration of tax refunds.
According to the 2019 Series 1 Auditor General’s Report (LKAN) presented today in Parliament, the implementation of ReFAL allowed tax refunds to be made within a stipulated period to avoid payment of compensation for delays, as provided in Section 111D of the Income Tax Law. (Law 53).
The audit also recommended that LHDN ensure that the government-channeled allocation is used in its entirety for tax refunds for assessment year 2017 (YA 2017) and prior years.
“The audit review found that the tax refund commitment as of December 31, 2019 amounted to RM10.851 billion, involving 1.26 million taxpayers.
“Of that amount, RM3,807 billion (35.1%) were back tax refunds for 2017 and prior years, while RM7.044 billion (64.9%) was for 2018 and the year 2019, “according to the report.
This was because LHDN did not fully implement the ReFAL policy, he added.
“The late tax refund commitment had caused LHDN to assume the arrears in compensation for the delay in the payment of income tax (Section 111D of the Income Tax Law (Law 53) which amounts to 38.29 million ringgit (as of 2019) for 135,960 cases from YA 2013 to 2019.
“The amount of compensation will continue to increase as long as the tax refunds are not settled within the stipulated period,” the report added.
Tax refunds through the Tax Refund Fund, established since 2005, consist of the fiscal surplus under the Income Tax Law of 1967 (Law 53), the Petroleum Law (Income Tax) of 1967, the Real Estate Income Tax Act of 1976 and the Stamp Act of 1949.
