Tax exemption on mega projects given since 1980s: Customs DG

PUTRAJAYA: Tax exemptions have been awarded to several large projects owned by the government since the 1980s, and the issue of waiving the Goods and Services Tax (GST) for procurement of materials and services related to the East Coast Rail Link (ECRL) project should not be played up, said Customs director-general Datuk Seri Subromaniam Tholasy.
He said the tax relief for the ECRL project was given due to the fact the project was wholly-owned by the Malaysian government through Malaysia Rail Sdn Bhd.
"It is true that the government has given tax exemption for the ECRL project to Chinese companies, but we have to remember that this project belongs to Malaysia, and the real owner is Malaysia, which ultimately benefits Malaysia and not China," he told a press conference here, today.
"This issue should not be twisted out of context because the government has also given exemptions like this during the era of the Sales and Service tax (SST) for several large projects in the 1980s, during Tun Dr Mahathir Mohamad's time (as prime minister).
"Under the Incentives For Approved Service Projects (ASPs), import duties and sales tax exemptions on machines and equipment have been granted for projects in the transport, telecommunications and utilities sectors," he said.
Subromaniam said telecommunications companies, independent power producers (IPPs), seaports and airports as well as train companies were also among the beneficiaries under the incentive scheme.
"Among the major projects which received exemption are projects involving the IPPs, SMART Tunnel, Bukit Jalil Stadium, Kuala Lumpur International Airport (KLIA), Express Rail Link (ERL), Mass Rapid Transit (MRT) and many other projects, to reduce cost," he said.
"The Customs Department would like to stress that there is indeed a mechanism under GST aimed at reducing the impact on targeted groups.
"The department will, from time to time, consider exemption applications from companies that are eligible," he said.
In general, he said, the tax exemption on the companies concerned was to ensure that the ECRL project could be carried out successfully, benefiting the people.
"If the exemption is not given, the government will have to bear GST on these procurements, in turn requiring the government to increase borrowings to cover costs, or bear losses," he added. — Bernama