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FORMER finance minister and DAP adviser Lim Guan Eng has urged Prime Minister Datuk Seri Anwar Ibrahim to immediately release tens of billions of ringgit in excess tax refunds reportedly held back by the Inland Revenue Board (LHDN), citing an urgent need to alleviate a cash squeeze affecting Malaysian businesses, particularly small and medium enterprises (SMEs).
“There is no moral, ethical or legal right for government departments to withhold paying back full refunds when this is the taxpayers’ own money,” Lim said in a statement, stressing that swift action on refunds, alongside greater support for local producers, would provide the fastest relief for struggling firms.
Lim drew parallels with the previous Barisan Nasional administration, noting that the withholding of Goods and Services Tax (GST) refunds before 2018 caused widespread economic hardship before being addressed under the Pakatan Harapan government.
“The more than RM30 billion in GST refunds held back before 2018 under the BN administration were paid back by the new PH administration beginning in 2019,” he said.
The former finance minister highlighted that the practice of withholding excess corporate taxes resumed in 2020, with outstanding refunds now estimated to total tens of billions of ringgit.
According to Lim, these figures are based on published data and complaints collected by DAP representatives nationwide, with cases ranging from RM100,000 withheld over five years to sums exceeding RM100 million for certain companies.
While some refunds have reportedly begun to be disbursed under the current unity government, Lim urged more rapid action.
He proposed a targeted RM20 billion payout in January 2026 ahead of the Chinese New Year holidays on February 17 and 18, to inject liquidity into the economy.
“RM20 billion in excess tax refunds paid next month in January before the Chinese New Year will help overcome the current cash squeeze and generate tremendous goodwill to the prime minister from businesses,” he said.
Lim also stressed the broader economic pressures faced by local firms due to global trade tensions. He cited ongoing tariff disputes, particularly involving the United States, which have led to the dumping of foreign goods and a contraction of order books for Malaysian companies.
“The tariff war of Donald Trump has hurt Malaysian businesses with the dumping of foreign goods, forcing many to face declining or no new business orders,” he explained.
To counteract these challenges, Lim proposed a new policy mandating that the government purchase at least 50 per cent of local products, a move aimed at sustaining domestic demand and supporting SMEs.
“Companies, especially SMEs, need help to generate new business orders to help overcome the current cash squeeze,” he said, urging immediate action to restore liquidity and confidence in the private sector.
Lim concluded that prompt disbursement of excess tax refunds, combined with proactive support for domestic producers, could stabilise the business environment, mitigate the ongoing cash crunch, and strengthen confidence in the unity government ahead of 2026. - December 14, 2025