Government to settle overdue tax refunds

The government has announced a plan to settle within the next 28 months some Lm17 million in long overdue tax refunds owed to about 21,000 individuals and companies.

Parliamentary Secretary Tonio Fenech said yesterday the government had made the pledge to settle the issue in last year's budget speech.

The tax refunds date back to pre-1999, when the government had introduced the self-assessment system through which the Inland Revenue Department became obliged to affect refunds within six months, after which it would have to incur interest.

The books since 1999 are pretty much in order, Mr Fenech said. However, a number of pre-1999 cases remained pending, with some exceptional cases going back even to the late 1980s.

Those owed less than Lm10,000 (about 4,000) will be paid within four months, while those owed more will be receive two payments, one within 16 months (involving about 7,000 cases) and the final payment within 28 months.

Asked if he thought 28 months was excessive, given that many SMEs are cash-starved, Mr Fenech pointed out that most SMEs fell within the under-Lm10,000 category, meaning the issue will be settled in four months.

"The others are large companies. All in all, I think 28 months is better than the indefinite period that these people have been waiting."

Should the payments be issued later than the dates the government is binding itself to, the IRD would have to pay interest as it does in post-1999 cases.