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FMM Press Statement: Government Should Refund Outstanding GST Refunds Before Implementing SST

Kuala Lumpur, August 10, 2018 - The Federation of Malaysian Manufacturers (FMM) has received numerous complaints from our members on the outstanding Goods and Services Tax (GST) input tax refunds. Based on feedback received from over 100 FMM members to our survey conducted in July 2018, these companies collectively have yet to receive over RM220 million in input tax refund. If FMM’s 3,000+ direct member companies are taken into consideration, the amount of refunds overdue to manufacturers could be much bigger. The delay in refunds has caused serious cash flow issues for our members, especially SMEs, and continues to hurt exporters. 

While we appreciate the Minister of Finance’s candid and transparent announcement that the Government owes businesses RM19.4 billion in GST refunds, FMM hopes for the approved refunds to be channelled back to members soonest possible. We would also like to urge the Government to ensure that all pending cases on special sales tax refunds dating back to the GST era since 2015 are reviewed and closed before the Sales and Services Tax (SST) 2.0 is implemented. We urge the Ministry of Finance to have a dialogue with stakeholders affected by the outstanding GST related refunds to determine practical solutions to resolve this critical issue. We also require Government’s assurance that there will be no offset of GST credit for future SST payments. 

The business sector has been following closely the passage of both the Sales Tax and Service Tax bills through Parliament. It is important to the business sector that both Bills have smooth passage and are passed into law quickly so as to restore certainty and clarity in manufacturing operations and allow us to initiate at full steam the necessary procedures to implement the new tax regime. 

To assist businesses with the transition from the GST to SST regime, FMM proposes for a waiver of penalties on mistakes made during the initial implementation of SST. Exceptions to the waiver should only be targeted at parties who are intentionally trying to defraud the Government. We also urge the Government to be vigilant in monitoring loopholes and applying strict enforcement with respect to black economy activities, illicit capital outflows and tax avoidance under the SST regime.

FMM welcomes continued close consultation and hopes to meet up with the Ministry of Finance and Royal Malaysian Customs Department on the way forward to secure a win-win solution.

FMM Advocates Transparency, Integrity and No Corruption

About FMM
The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 10,000 member companies (3,000 direct and 7,000 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.

Media Enquiries:
Esther Boey, Senior Manager, Research & Communication
Tel : 03-6286 7200 | Email: /

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