Updates on Goods and Services Tax (GST) Input Tax Refunds: Implementation of ‘Pay First, Audit Later’ Strategy by Royal Malaysian Customs Department

Head Office, KL

June 24, 2020

To: Managing Directors / General Managers / Export / Import / Purchasing Managers / Executives

Updates on Goods and Services Tax (GST) Input Tax Refunds:

Implementation of ‘Pay First, Audit Later’ Strategy by Royal Malaysian Customs Department

Following the request by FMM to Ministry of Finance and Royal Malaysian Customs Department for the Goods and Services Tax (GST) to be expedited especially to address cash flow issues during this critical period post Movement Control Order, the Ministry of Finance in a media statement dated June 15, 2020 announced that Customs Department is committed to expedite remittance of outstanding Goods and Services Tax (GST) input tax claims to taxpayers by employing ‘pay first, audit later’ approach, with payments to be made beginning June 22, 2020 and expected to be completed by December 2020. The Customs Department will be implementing the following strategies to refund companies:

Outstanding Refund

(per taxable period)

GST Refunds Reimbursement Strategy

< RM100,000

All GST refunds will be made as soon as desk review is carried out. However, companies may still be subject to audits at any time within the next 6 years (calculated from September 1, 2018).

≥ RM100,000

All GST refund claims to be evaluated based on a risk assessment process by Customs Department.

Claims that passed the risk assessment process and desk review - 100% GST refund will be remitted to the companies. However, companies may still be subject to audits at any time within the next 6 years (calculated from September 1, 2018).
Claims that failed the risk assessment process, GST refund would not be made until a full field audit is carried out. Nevertheless, to ease the company’s cash flow burden, 90% GST refund claims would be made when the following conditions are met:

Passed the initial verification process carried out via desk review;
Letter of Undertaking (LoU) to be provided by the Director of the company declaring that the information given in the application is true and correct and declare to pay any discrepancy in payment of taxes and penalties; and
Submit bank guarantee at the rate of 10% of the outstanding GST refund calculated based on the original refund amount as at January 1, 2019.

Field audit will be carried out on the company and the bank guarantee will be returned after the audit confirms that there is no shortage of tax revenue involved.

Companies that have yet to receive the GST refund claims are required to update their particulars in the Taxpayer Access Point (TAP) system ie. company address, contact and bank account numbers and other relevant details immediately to facilitate the repayment process or call the nearest Customs office to determine the status of the GST refund claims. Further information on the GST refund process by Customs Department can be accessed from: