MAGNUM TO CHALLENGE TAX NOTICES
Assessments and penalties issued by IRB against group total RM476.56m
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.