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THE Inland Revenue Board (IRB) is subject to paying an annual two per cent compensation to individuals, enterprises and corporate taxpayers if there is a failure to rebate excess taxes paid by them, said Lim Guan Eng.
The former Finance Minister said that under Section 111D of the Income Tax Act 1967, the IRB is liable to pay a two per cent compensation annually if there is a significant delay in rebating the excess amount to the taxpayer.
"This applies to all taxpayers - individuals, enterprises and corporate entities," the Bagan MP said in a statement.
Lim said that the section allows for daily compensation calculation, starting from the dates the rebate is supposed to be accorded based on the e-filing (90 days) and through post or courier (120 days), upon submission of the tax returns.
Those entitled for this include - individuals under the PCB (Potongan Cukai Bulanan), CP500 (Notis Bayaran Ansuran) and CP204/CP205 (Anggaran Cukai Kena Bayar oleh Syarikat).
Generally, the IRB is an efficient body which offers rebates fast and within a stipulated time, hence it is unperturbed by the need to accord the two per cent compensation to those who have yet to receive their rebates.
But it becomes an "issue" if there is a significant delay in refunding individuals, enterprises, and corporate entities.
It is estimated that there are two million taxpayers who have yet to be refunded on the excess taxes they had paid, said the DAP party adviser.
"The late repayment has lingered for more than five years, since 2020."
For example, Lim cited that if the IRB defaults on the refunding of RM30 billion at the end of 2024, it means that the body must settle a two percent annum compensation of up to RM600 million.
And if the issues remain unsettled, IRB could be liable to pay compensation of up to RM1 billion, said Lim.
"We need to be fair to our taxpayers. IRB needs to find a way to refund the dues owed to them," said Lim. - January 9, 2026.
