KUALA LUMPUR, Aug 11 – The delay in refunding the input tax from the Goods and Services Tax (GST) to companies will affect their cash flow as they might need to rely on borrowings to cover the unexpected delay.
Tax consultant from YYC Holdings Sdn Bhd, Yap Shin Siang, said companies would have to bear a financial burden as they have to operate on extra financial cost to fund such borrowings.
“In today’s scenario, businesses were uncertain whether they could get their tax refund back or not,” she told Bernama. However, she said that it was still too early to tell if the delay in GST refunds would have any implications on small businesses or consumers.
This is because the delay in input tax was incurred on exporters and companies which have large capital upfront such as property developers, oil and gas companies, as well as warehouse and factories.
“Even though this would be a burden, businesses would not increase their prices due to the delay in GST refunds as market competition is stiff,” she pointed out.
Meanwhile, Deloitte Malaysia indirect tax partner Senthuran Elalingam said that pricing decisions made by businesses were based on various factors of which tax was one of them.
“But we cannot pinpoint a single factor to suggest why prices increase or decrease,” he explained. However, Senthuran stressed that it was important for the government to enforce strict measures to curb profiteering to ensure businesses do not take advantage of the situation.
“The government has to implement wider measures to control profiteering and we would expect that enforcement of these measures will help limit unfair price increases,” he said.
Concerns among businesses arose after Finance Minister Lim Guan Eng on August 8 said that RM18 billion in input tax credit under the GST system since 2015 had gone ‘missing’ from the trust account.
According to the Royal Malaysian Customs Department’s (RMCD) records on the GST input tax, there was a total of RM19.4 billion in input tax credit to businesses since 2015 until May 31 this year.
However, only RM1.5 billion remained in the trust account. RMCD said it had made a claim on the said amount but was not approved at a monthly meeting of the trust account. — Bernama