SP Setia unit hit with RM75mil tax bill

But property developer says it will contest notice

PETALING JAYA: The Inland Revenue Board of Malaysia (MIRB) has served notices of additional assessment and a penalty totalling RM75.38mil to SP Setia Bhd’s unit, but the company said it has reasonable grounds to contest the notice.

In a Bursa Malaysia filing yesterday, SP Setia announced that its wholly owned subsidiary, SP Setia Bandar Setia Alam Sdn Bhd, was served with notices of additional assessment for years 2008, 2009, 2010, 2011 and 2013, for an additional RM51.99mil of income tax, and a penalty of RM23.39mil.

“The abovementioned additional income tax and penalty were imposed by the MIRB as the MIRB has taken the view that the gains from the disposal of land and properties held under investment properties under BSASB in the above mentioned YAs are chargeable to income tax under the Income Tax Act 1967 instead of the Real Property Gains Tax Act 1976 (RPGTA),” said SP Setia.

However, the group said its Bandar Setia Alam unit will challenge the additional assessment and penalty on grounds that the sales of the investment properties are capital transactions that fall under the purview of the RPGTA.

“Upon consulting its tax solicitors, BSASB is of the view that there are reasonable grounds to challenge the basis and validity of the disputed notices of additional assessment raised by the MIRB and the penalty imposed.

“We will take all necessary actions to protect the interest of BSASB and the SP Setia Group,” it added.

For the third quarter ended Sept 30, 2017, SP Setia’s net profit surged 89% to RM253.22mil from RM134.07mil last year, mainly attributed to higher contributions from its property development division.

This was on the back of a lower revenue, which fell to RM842.49mil from RM1.26bil a year ago, weighed down by lower earnings from the property development and construction segments.

For the nine-month period, SP Setia’s net profit rose to RM494.72mil from RM383.24mil in the previous corresponding period.

Revenue fell to RM2.58bil from RM3.19bil last year.

The group achieved sales amounting to RM2.82bil for the nine-month period.

SP Setia closed 1.4% lower at RM3.49, traded on a volume of 9.94 million shares.