Why are billions in tax refunds allegedly withheld by LHDN?

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Alleged Withholding of Billions in Tax Refunds by LHDN

DAP adviser Lim Guan Eng alleges that the Inland Revenue Board (LHDN) is withholding tens of billions of ringgit in excess tax refunds owed to companies. This practice, according to Lim, lacks any moral, ethical, or legal basis, as it involves retaining funds that rightfully belong to taxpayers. The situation is being compared to a similar issue that occurred under the previous Barisan Nasional administration, where Goods and Services Tax (GST) refunds were also withheld.
Historical Precedent of Withheld Refunds

The issue of withheld tax refunds is not new, with a significant precedent set prior to 2018. Under the Barisan Nasional administration, an estimated amount exceeding RM30 billion in GST refunds was held back. Following the change in government, the Pakatan Harapan administration, which came into power in 2018, began the process of repaying these outstanding GST refunds starting in 2019.
Resumption of Withholding Practices

It is reported that the practice of withholding excess taxes paid by companies resumed in 2020. The current estimated total of these outstanding refunds is in the tens of billions of ringgit. These figures are reportedly derived from a combination of published data and numerous complaints received by DAP elected representatives across the nation.
Scale and Scope of Withheld Amounts

The withheld amounts vary significantly, with reported cases ranging from RM100,000 that has been held for five years to sums exceeding RM100 million since 2020. These individual cases highlight the broad impact of the alleged withholding policy on businesses of different sizes, from small enterprises to larger corporations. While some refunds have reportedly begun to be processed by the unity government, calls are being made for a more accelerated approach.

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Why are billions in tax refunds allegedly withheld by LHDN?

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