Ng revealed today a compilation of figures based on personal research which showed that the Customs Department owes the councils sums amounting to more than RM36 million as it had not refunded tax paid since June 2016.
Ng said when the goods and services tax (GST) was implemented in April 2015, the Customs Department had no issue providing tax refunds to the 12 councils.
However, after June 2016, the Customs Department failed to pay back the guaranteed tax refunds as stated in its policy.
According to the figures, which were given to Ng by each local council in Selangor, the Customs Department owes the Shah Alam council over RM5.9 million, followed by Klang (RM5.6 million), Kajang (RM5.1 million), Ampang Jaya (RM5 million), Selayang (RM4.1 million) and Petaling Jaya (RM3.2 million).
The department owes Subang RM2.7 million, Sepang RM2.1 million, Hulu Selangor over RM700,000, Kuala Langat over RM600,000, Sabak Bernam RM400,000 and Kuala Selangor close to RM200,000.
Although discussions were held with the Customs Department, Ng claimed different officers had given different explanations.
“Different customs officers gave different interpretations of why the tax refunds were not paid back to local councils,” he said at a press conference today.
“One of the excuses given was that the councils did not have input and output tax reports.”
He demanded that the federal government explain why the department had failed to pay the GST tax refunds, asking if the situation had arisen because the government was broke.
“Is the government too poor to pay back the promised tax refunds?”
Although local councils are exempted from paying the GST as stipulated by law, Ng claimed that they still had to pay the tax and apply for tax refunds which would be provided after every three months.
According to Article 64 of the GST general guide, the federal government and state governments are considered non-applicants, which allows them to be exempted from the tax.
Ng said the Customs Department should have provided tax exemption letters to the local councils to avoid such hassles.
He added that he had consulted tax experts who said there was no issue with the government providing a zero-rated GST for local councils as they were exempted from the tax.
He voiced concern that such issues might occur not only in Selangor, but in other states throughout Malaysia as well.
FMT is attempting to get a response from the Customs Department.