AG Cham­bers is­sues or­der ex­empt­ing re­li­gious or­gan­i­sa­tions from taxes

The Borneo Post - - FRONT PAGE -

KUCHING: The At tor­ney Gen­eral’s Cham­bers (AGC) has pub­lished the Fed­eral Gov­ern­ment Gazet te on the In­come Tax (Ex­emp­tion) Or­der 2017, dated Feb 15 ex­empt­ing re­li­gious in­sti­tu­tions or or­gan­i­sa­tions from pay­ing tax from their in­comes ef­fec­tive the year of as­sess­ment 2017.

The ex­emp­tion or­der was made on Feb 7 in the name of Se­cond Fi­nance Min­is­ter Datuk Seri Jo­hari Ab­dul Ghani, in ex­er­cis­ing the pow­ers con­ferred to him by para­graph 127(3)( b) of the In­come Tax Act 1967 [Act53].

The Or­der stated that the Min­is­ter ex­empts a re­li­gious in­sti­tu­tion or or­gan­i­sa­tion in the ba­sis pe­riod for a year of as­sess­ment from the pay­ment of tax in re­spect of gross in­come de­rived from all sources and from fur­nish­ing a re­turn un­der sec­tion 77 of the Act.

The Or­der stated that “a re­li­gious in­sti­tu­tion or or­gan­i­sa­tion” means a re­li­gious in­sti­tu­tion or or­gan­i­sa­tion which is es­tab­lished in Malaysia ex­clu­sively for the pur­pose of re­li­gious wor­ship or the ad­vance­ment of re­li­gion and is not op­er­ated or con­ducted pri­mar­ily for profit.

Ad­di­tion­ally, it stated that a rel igious ins t itut ion or or­gan­i­sa­tion must be reg­is­tered with the Regis­trar of So­ci­eties Malaysia or un­der any writ­ten law gov­ern­ing such in­sti­tu­tion or or­gan­i­sa­tion.

The tax ex­emp­tion or­der for re­li­gious in­sti­tu­tions was is­sued fol­low­ing the con­fu­sion aris­ing from the amend­ment to para­graph 13(1) Ta­ble 6 of the In­come Tax Act 1967.

The is­sue was first raised by The Bor­neo Post, with views from var­i­ous quar­ters and tax con­sul­tants that the amend­ment will sub­ject re­li­gious bod­ies to be­ing taxed for their in­comes other than do­na­tions.

Mean­whi le, a se­nior tax con­sul­tant doubted if the ex­emp­tion or­der could be up­held in prin­ci­ple, if chal­lenged in the Court.

“It is like Par­lia­ment say­ing in­come is to be taxed and now the min­is­ter says not to tax. Yet, there is noth­ing in the Sched­ule or In­come Tax Act to specif­i­cally say that the in­comes of th­ese re­li­gious in­sti­tu­tions or or­gan­i­sa­tion are not to be taxed.

“I per­son­ally feel not quite com­fort­able with this ex­emp­tion or­der as such. Not ex­plicit.”

The se­nior tax con­sul­tant said the issuance of the ex­emp­tion or­der showed the gov­ern­ment’s in­ten­tion not to tax the in­comes of re­li­gious in­sti­tu­tions, it is ad­vis­able be­cause all MPs be it from Sarawak, Sabah or Penin­su­lar Malaysia to de­mand Par­lia­ment re­verse Para­graph 13(1)( b) of Sched­ule 6 of the In­come tax Act 1967 back to its pre­vi­ous po­si­tion by delet­ing the amend­ment made and passed in the pre­vi­ous Fi­nance Bill.

“Strike the iron while it is hot. It is to secure a guar­an­tee and safety in the cor­rect in­ter­pre­ta­tion of law to pre­vent abuse of power by tax of­fi­cer later.”

Kuching Chi­nese Com­mu­nity Char­i­ta­ble Trust Board chair­man Dr Chou Chii Ming said it is grat­i­fy­ing to see that the ex­emp­tion or­der made by Jo­hari as he had promised to the lead­ers of the five main re­li­gious groups.

“This ex­emp­tion or­der looks good and fair. The ex­emp­tion or­der is also to ex­empt or­gan­i­sa­tions con­cerned from fil­ing a tax re­turn as from year of as­sess­ment 2017,” he told The Bor­neo Post yes­ter­day.

As­so­ci­a­tion of Churches Sarawak (ACS) sec­re­tary-gen­eral El­der Am­brose Li­nang said they wel­come the tax ex­emp­tion given to re­li­gious or­gan­i­sa­tions and in­sti­tu­tions un­der the or­der.

“The tax ex­emp­tion or­der will clar­ify the un­cer­tainty of the law re­lat­ing to the source and na­ture of in­come or con­tri­bu­tions re­ceived by the re­li­gious in­sti­tu­tions or or­gan­i­sa­tions which are ex­empted from tax and ex­emp­tion from fur­nish­ing a tax re­turn.”

Li­nang called on the gov­ern­ment to grant full tax ex­emp­tion to all law­ful re­li­gious in­sti­tu­tions in Malaysia as prac­tised be­fore the amend­ment to the in­come tax law last year and al­low the con­trib­u­tors to ap­ply for tax re­bate sim­i­lar to that ac­corded to pay­ment of tithes (za­kat).

He took the op­por­tu­nity to thank Jo­hari who was will­ing to meet rep­re­sen­ta­tives of churches in Kuala Lumpur, Deputy Chief Min­is­ter Datuk Amar Dou­glas Ug­gah Embas and the state gov­ern­ment for their un­der­stand­ing on the is­sue.

“The churches are here for the com­mu­nity and not for com­mer­cial,” Li­nang em­pha­sised.

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