The Federation of Malaysian Manufacturers (FMM) is urging the government to settle all outstanding Goods and Services Tax (GST) refunds before implementing the Sales and Services Tax (SST).

In a statement today, FMM said it also hopes all pending cases on special sales tax refunds dating back to 2015 will be reviewed and closed.

"Based on feedback received from over 100 FMM members to our survey conducted in July 2018, these companies collectively have yet to receive over RM220 million in input tax refund.

"If FMM’s 3,000-plus direct member companies are taken into consideration, the amount of refunds overdue to manufacturers could be much bigger," the statement read.

FMM said the delay in refunds has caused serious cash flow issues for its members, especially SMEs, and continues to hurt exporters.

On Aug 8, Finance Minister Lim Guan Eng said an internal audit and inspection by the Customs Department found that there was an RM18 billion shortfall in GST refunds.

In response to this, FMM expressed its appreciation to the minister for his "candid and transparent announcement".

FMM is also proposing for a waiver of penalties on mistakes made during the initial implementation of SST, to assist businesses with the transition from the GST to SST regime.

"Exceptions to the waiver should only be targeted at parties who are intentionally trying to defraud the Government," FMM said.

The federation also hopes to meet with the Finance Ministry and the Customs Department to seek a practical solution to the delayed refund issue.