Several small and medium enterprises (SMEs) are saying they face difficulties when trying to claim back their GST refund from the Royal Customs and Excise Department.

SME Association of Malaysia deputy president Michael Kang said today the association has been receiving a lot of complaints on the difficulties faced by the SME operators.

"They are having big problems now," Kang ( photo ) told Malaysiakini .

Companies registered under the GST scheme can claim a refund on their input tax credit (ITC), which are the expenses they incur for business activities.

An accounts executive with a furniture wholesaler in Johor said she had followed all instructions when submitting the form, online, to the Customs Department.

But the executive, who only wished to be known as Neow, said she was then informed that the department needed to see the invoices for the items she was trying to claim, as proof.

"Whatever they want, we just submit to them," Neow said.

She did what she was told and handed over her company's invoices to the Customs Department, in person.

However, the department later asked her to provide an item-by-item listing of everything in the invoices.

"This is such a waste of time, asking me to do double work," she complained.

After all that hassle, she said, the Customs sent her company a letter, dated June 25, saying that the request for a refund could not be processed within the 14 working days that was promised.

Instead, she was told that they would only receive their refund after their invoices had been audited.

"And we don't even know when that will be," she lamented.

'High-risk returns audited'

The managing director of a company that sells biometric products, Teh Hon Seng ( photo ), said he went through a similar experience.

Teh said his company received no reply from Customs 14 days after they submitted the forms for the GST refund in April.

When they wrote to the Customs Department, they were told that they needed to submit their invoices as well.

"So we submitted the invoices, but also nothing happened. They said that they needed to audit the documents.

"When you say ‘audit’, it can take two or three months … it can even take a year, if you want," Teh said.

Delayed refunds could cause problems of cash flows for some companies, he pointed out, especially for those with a larger input tax than output tax.

"There seems to be an efficiency problem with the Customs," he said.

Former Customs Department GST director Subromaniam Tholasy explained that the first returns filed by many SMEs had a lot of errors in the form.

These have been rectified by the Customs Department, which had informed the companies concerned of their mistakes.

"Many have received their refunds. Only high-risk returns will be audited. The rest should be receiving their refunds in the next couple of weeks," Subromaniam said when contacted by Malaysiakini.

He did not clarify what qualifies as "high-risk returns".