SIBU: Charitable bodies that face the risk of its tax exemption status being cancelled by the Inland Revenue Board (IRB) are strongly encouraged to seek legal advice from tax accountants and lawyers specialised in taxation.
The Sarawak United People’s Party (SUPP) Dudong Branch’s Chairman, Councillor Wong Ching Yong, warned about the matter based on the recent High Court’s decision which was not in favour of the National Kidney Foundation (NKF).
“Recently, there was a High Court’s decision in connection with the NKF’s appeal to the High Court against the IRB’s decision to withdraw NKF’s tax exemption status under Section 44(6) of the Income Tax Act (ITA) 1967.
“The NKF appealed to the High Court via Judicial Review and its application was allowed, but the IRB however made an appeal to the Court of Appeal,” he stated in a press statement today.
Wong, an accountant by profession, said that he is aware of several charitable bodies in the state whose tax exemption status was cancelled by IRB.
Pointing out that it was regrettable that they did not appeal to the High Court, he advised them to not give up quietly and surrender the rights of appeal for judicial review.
Touching on the background of NKF versus Director General of Inland Revenue (DGIR) whereby the High Court’s decision was made on January 22 this year, he said NKF filed a judicial review application, seeking to quash the decision of the DGIR.
He outlined that the DGIR had withdrawn NKF’s tax exemption status under Section 44(6) of the ITA, 1967 and issued notices of assessment for the years of assessment 2017 and 2018.
He said NKF was granted tax exemption by the IRB in 1970, and following a 2019 audit by the DGIR, NKF was informed of its non-compliance with the conditions for tax exemption approval under Section 44(6) of the ITA.
“After several exchanges of communication between the parties, the DGIR maintained their position, leading NKF to file for judicial review against the DGIR’s decision,” he stated.
He clarified that the issue for the court’s determination was whether the DGIR’s decision to withdraw NKF’s tax exemption status under Section 44(6) of the ITA was correct and in accordance with the provisions of the law, whereby the NKF’s application was allowed.
Stating that charities in Malaysia are operated by people who are professional, honest people of high standing in the society, Wong said he personally had good experience with the board of trustees of a kidney foundation here.
“I am being informed that the tax exemption status of the Sibu Kidney Foundation was also cancelled some years ago.
“This is detrimental to any charity because the tax exemption is very attractive to donors who can enjoy tax benefits for their donations to a charity.
“The tax policy by IRB of going to the extent in cancelling the tax exemption status of charitable bodies is an indication that the coffer of the government is very low.
“Once again, it is high time to bring back Goods & Services Tax (GST) to broaden the tax base of the taxation system of Malaysia,” added Wong, who is also Sibu Rural District Council’s (SRDC’s) Deputy Chairman.
