Tax shipping firms, not religious bodies for income – KK MP
KOTA KINABALU: The income of religious bodies, whether from donation or business, should continue to be exempted from taxes, Kota Kinabalu member of parliament Jimmy Wong stressed.
This was because religious institutions and organizations work hard to find funding for themselves as they could not just depend on government allocation, he said.
“Funding from the government is minimal, that is why religious bodies have to depend on themselves. Some invest in property and are self-financing through prudent investment. They are not abusing the law but when you tax them, you are taking away their income,” he said when commenting on the amendment to the Income Tax Act 1967 on tax exemption for religious bodies.
Speaking to reporters yesterday, Jimmy said Seputeh member of parliament Teresa Kok had contacted Second Finance Minister Datuk Johari Abdul Ghani about the amendment and the latter's reply through the WhatsApp messenger service was that many of these religious bodies were actively involved in investments and some were frequently buying and selling properties using their funds.
The minister also said they earned huge profits and some paid huge allowances to the committees.
The government needed to have a system to safeguard all public donations so that it is used solely for religious purposes and not for profit making, he said, adding that if it was being used for profit making, then such investments should be taxed.
To this Jimmy said the government must show proof that the religious bodies were paying huge allowances to their committees from profits earned from their investments.
“If this is true, then the government should do something to stop that, not tax the religious bodies. This is victimizing them,” he opined.
He also suggested that the government should instead tax the shipping companies in Malaysia, which, under the Cabotage Policy, were being exempted from tax.
“Shipping companies operating within Malaysia are generating more than RM1.2 billion turnover a year and are exempted from profit taxation for more than 30 years until now. So why does the government go after the religious bodies but not the big corporations operating big businesses which generate huge profits and are paying huge bonuses and salaries?” he questioned.
Jimmy said several religious bodies in Peninsular Malaysia had reached out to Teresa with their grouses on the matter and he urged their state counterparts to do the same as he was ready to assist them.
“We therefore call on the government to reinstate the Income Tax Act to its status quo. The government should also have consulted the religious bodies and law makers first before making the amendment,” he said adding that it was wrong to tax religious bodies just to fill the government's coffers.
On Tuesday, the Inland Revenue Board (IRB) explained that the Income Tax Act 1967 was recently amended to make clear the tax-exempt status of religious organisations.
IRB said all religious institutions or organisations qualified for tax exemptions, provided their income was from donations and intended for religious activities.
It said the amendment explicitly stated that religious institutions and organisations qualified for tax exemption.
“The amendment to paragraph 13(1)(b) Schedule 6 Income Tax Act 1967 (Act 53) in Budget 2017 seeks to provide clarity of the law on the application of exemption to religious institutions or organisations.
“Prior to this amendment, there has been some confusion among taxpayers as to whether or not religious institutions or organisations automatically qualify for the exemption under the act, or if they were required to obtain approval from the IRB director-general, under Section 44(6) Act 53.”
It said all religious institutions or organisations automatically qualified for tax exemption on income from donations contributed by followers solely for the purpose of religious worship activities or the advancement of religion.
“The exemption applies to all religions.”
It explained that income from business or rental was taxable under Act 53 and outside the scope of the exemption.
“Taxable income is income after the deduction of all expenses incurred in the production of said business, and income from rental. This treatment is consistent with the principles of Act 53.”