MAG­NUM TO CHAL­LENGE TAX NO­TICES

As­sess­ments and penal­ties is­sued by IRB against group to­tal RM476.56m

New Straits Times - - Business -

KUALA LUMPUR

THE In­land Rev­enue Board (IRB) has served Mag­num Bhd and its wholly-owned sub­sidiary Mag­num Hold­ings Sdn Bhd (MHSB) no­tices of tax as­sess­ment and penal­ties to­talling RM476.56 mil­lion.

In a state­ment to Bursa Malaysia, Mag­num said its por­tion of RM22.71 mil­lion cov­ered the 2008, and 2011 to 2015 years of as­sess­ment, while MHSB’s por­tion of RM453.75 mil­lion was re­lated to taxes from 2008 to 2013.

“Both Mag­num and MHSB had ap­pointed so­lic­i­tors and are ini­ti­at­ing pro­ceed­ings to chal­lenge the va­lid­ity and le­gal­ity of the no­tices of as­sess­ment,” said Mag­num.

The com­pany said the no­tices were raised after IRB dis­al­lowed MHSB’s de­duc­tion of in­ter­est ex­penses and loan stock in­ter­est ex­penses in­curred dur­ing the said years of as­sess­ment for the Se­lec­tive Cap­i­tal Re­pay­ment Ex­er­cise and Pri­vati­sa­tion of Mag­num Cor­po­ra­tion Sdn Bhd in 2008, then known as Mag­num Cor­po­ra­tion Bhd.

“Fur­ther, the no­tices of as­sess­ment for the years of as­sess­ment 2008, 2009, 2010 and 2011 were is­sued out of the pre­scribed time frame un­der law,” it added.

In the case of Mag­num, the no­tices arose after its de­duc­tion of in­ter­est ex­penses for in­vest­ment were dis­al­lowed.

“Upon con­sult­ing its so­lic­i­tors, the board is of the view that there are rea­son­able grounds to chal­lenge the va­lid­ity of the no­tices of as­sess­ment raised by the di­rec­tor­gen­eral of IRB and the penalty im­posed.

“There will not be any im­mi­nent fi­nan­cial ef­fects on the group as it is seek­ing to se­cure a stand over of pay­ment pend­ing the res­o­lu­tion of this mat­ter.”

Mag­num’s an­nounce­ment comes amid re­ports that IRB and re­lated agen­cies are seek­ing to re­cover un­set­tled taxes from the cor­po­rate sec­tor run­ning into hun­dreds of mil­lions of ring­git. Ear­lier this month, IRB seized Coun­try Heights Hold­ings Bhd (CHHB) ex­ec­u­tive chair­man Tan Sri Lee Kim Yew’s fixed de­posits amount­ing to RM126 mil­lion placed with a bank.

This is be­lieved to be linked to a tax li­a­bil­ity of CHHB’s wholly-owned sub­sidiary, Coun­try Heights Sdn Bhd. Lee sub­se­quently agreed to hav­ing the fixed de­posits used to set­tle the tax li­a­bil­ity.

In a sep­a­rate an­nounce­ment, Mag­num re­ported lower rev­enue of RM697.1 mil­lion in the first quar­ter ended March 31, com­pared with RM752.6 mil­lion in the cor­re­spond­ing quar­ter last year.

Pre-tax profit fell to RM46 mil­lion from RM97.4 mil­lion pre­vi­ously, at­trib­uted to lower gam­ing sales due to in­tense com­pe­ti­tion from il­le­gal op­er­a­tors, weak con­sumer spend­ing and one less draw in the cur­rent quar­ter.

“With the il­le­gal gam­ing activities con­tin­u­ing to flour­ish and af­fect­ing mar­ket share, cou­pled with ris­ing costs lead­ing to lower dis­pos­able in­come, the di­rec­tors ex­pect that gam­ing rev­enue will mod­er­ate. The group will con­tinue with its var­i­ous mar­ket­ing strate­gies and prod­uct in­no­va­tion to mit­i­gate the sales de­cline,” said Mag­num.

Di­rec­tors do not pro­pose to pay any div­i­dend for the fi­nan­cial pe­riod un­der review.

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