Make all tax exemptions clear cut

> Firm urges govt to place power within Parliament and abolish regulator

KUALA LUMPUR: Tax firm Lee Hishammuddin Allen & Gledhill (LHAG) has urged the government to take away the power of according tax exemptions from the finance minister and place it with Parliament to avoid abuse and abolish the Special Commissioners of Income Tax (SCIT).

LHAG partner S. Saravana Kumar said under the current act, the finance minister is allowed to give tax exemptions to individuals and companies at his discretion, without having it tabled at Parliament.

“Rakyat has the right to know why certain people deserve to get tax exemptions and if they deserve it, sure,” he told reporters at LHAG’s Tax, GST & Customs Seminar 2018 yesterday.

Setiawangsa Member of Parliament Nik Nazmi Nik Ahmad (pix), who was the guest of honour at the event, concurred with Saravana on the power leaving it open to abuse and stated that he hopes to bring it up in Parliament “at the right time”, to push for a repeal.

“At least moving forward, in the future, you cannot have that provision. Companies maybe, for whatever reason need to be exempted, but at least it needs to be transparent. When it is tabled to Parliament, people will have a look at it, they can see and question, and we can justify why those companies are given (exemptions),” he added.

On whether previous companies, which were given tax exemptions, would be audited, Nik Nazmi, who is also Parti Keadilan Rakyat youth leader said it would be discussed “from a practical level” on how to go about it once the section is repealed.

On the issue of SCIT, Saravana called it an archaic system adopted from the UK that has already been abolished in the country where it originated from.

He opined that it should be replaced with a more modern creature such as an independent tribunal system that does not report to the finance minister.

Nik Nazmi on the other hand opined that Malaysia should utilise the judicial system that is in place instead of going to the SCIT with tax cases, which can be very technical and complicated.

“We have a functioning, efficient court system so we should use that judicial system that we have in place rather than having special commissioners to deal with income tax cases because there’s a lot of issues of delay,” he said.

Nik Nazmi said the fundamental problem with SCIT is the separation of powers as both the special commissioner and Inland Revenue Board report to the finance minister, which leads to conflict of interest.