GST refunds poser

I REFER to “Delays in GST refunds put SMEs in tight spot” (SunBiz, Aug 24).

I don’t understand why so many businesses are in a GST refund situation? This means that their input tax paid is higher than their output tax (sales) collected. So does this mean that many businesses are experiencing losses as their sales are lower than their purchases or is this a case of too much purchases (although not paid yet) or high capital items purchased.

If the purchases are high, is it a case of trying to get the refund from customs first before paying the suppliers? Is it a case of businesses selling zero rated supplies but buying standard rated supplies?

Or are they not accounting for their sales correctly and only accounting for sales that have been paid and excluding sales not paid?

A typical business should not be in a refund situation, they should be in net payment to customs position.

I can understand the customs being cautious in these cases. Maybe customs can release the categories of refunds so the public can understand the situation better.

The article quotes the customs GST director giving an example of a company stating a RM10 million monthly turnover upon registration but when they submit they state a RM12 million monthly turnover. Surely this is not an issue as a RM12 million turnover means more output tax collected and more payable to customs, so what is the issue with this? No one is going to declare a higher turnover and pay more GST unless it is actual.

Radha Vengadasalam

Kuala Lumpur