Dr M's gov't gave more tax exemptions, lost more money - Customs DG

The government under Dr Mahathir Mohamad’s leadership had given more tax exemptions to megaprojects and this had caused the government direct losses, Customs Department director-general Subromaniam Tholasy said today.

This was in contrast with the present government’s decision to grant China Communications Construction Company (CCCC) a relief from paying the goods and services tax (GST) in its procurement of the East Coast Rail Link (ECRL), which the department said would ultimately benefit the government and people.

Subromaniam further said that not only had megaprojects under Mahathir’s time been exempted from the sales and services tax (SST), they had also been exempted from import duties.

“Why has this become a big issue now? Previous governments have given lots of tax exemptions to projects... including during the time Mahathir was the prime minister.

“Not only was the SST exempted, but also import duties.

“...the SST system is a single-tier system where, if an exemption is given, the government sustains a direct loss. The government lost (money) but it still gave (the exemptions).

“However, the GST system is different because when you give exemptions, they are not able to seek refunds on import credit tax and there are no refunds (for the GST).

“In truth, through the exemption of GST to the ECRL, the government is making a good decision and this brings more benefit to the rakyat,” Subromaniam said in a press conference at the Customs Department headquarters in Putrajaya.

Projects exempted from SST during Mahathir’s time included the Smart tunnel, the Bukit Jalil National Sports Stadium, the Kuala Lumpur International Airport (KLIA) and the Electric Rail Transit (ERL), he added.

Subromaniam held today’s press conference to “clear the air” over confusion on why the present government had exempted Chinese construction firm CCCC from the GST.

The tax exemption was first revealed to the public by Amanah vice-president Husam Musa on Tuesday.  

An uproar has since ensued, with some bumiputera firms chastising the government for “favouritism” towards large Chinese firms.

"I am quite uncomfortable looking at the situation as it has elements of favouritism.

"Even we have to pay GST when buying raw materials such as cement and nails but this (CCCC) is a big business, not small ones," the Class F Bumiputera Contractors Association (Perkobf) president Turkiman Radion previously said.

The Malay Economic Action Council (MTEM) has also urged the government to clearly spell out the terms to qualify for GST relief.  - Mkini