Wednesday, April 18th, 2018

 

Inland Revenue Board: We’ll object to all applications for judicial review

KUALA LUMPUR: The Inland Revenue Board of Malaysia (IRB) will object to all applications for judicial review in cases against taxpayers, said IRB director of legal department Abu Tariq Jamaluddin.

“IRB is aware that there are now a lot of cases where taxpayers choose not to go to SCIT (Special Commissioners of Income Tax) but instead file a judicial review application to the High Court and at the same time try to get a stay order for the payment of tax,” he said during a panel session at the Malaysian Tax Conference 2018 yesterday.

Abu Tariq said taxpayers need to get leave for judicial reviews so once the taxpayer files the leave application, IRB will work together with the Attorney-General’s Chambers to object to the leave application.

“So all judicial review applications now will be objected to by IRB. Of course, the main reason for the objection is that the appropriate way would be to go to the SCIT. We know that if leave is granted, stay will be granted. To us, once a stay is granted, that defeats the purpose of Section 103 of the Income Tax Act that you have to pay first.

“If you want to dispute an assessment, you can appeal but you have to pay first. Once stay is granted, that will go against the spirit of Section 103. That’s the reason why we will make sure that all applications will go through the normal process of appeal which is at SCIT,” he added.

Abu Tariq said the option of a judicial review is still open to taxpayers but taxpayers will have to show illegality and irrationality on IRB’s part. For example, cases where IRB fails to follow a High Court decision or fails to follow its own public ruling would be appropriate cases for a judicial review.

MK Land Holdings, Tenaga Nasional and Magnum are among companies contesting huge additional tax and penalty decisions by IRB.

Shook Lin & Bok senior partner Sudharsanan R. Thillainathan said the judicial review option is more attractive for taxpayers as it allows them to bypass the SCIT, which takes a long time and also does not afford a stay of payment during the proceedings.

“The SCIT is bogged down with work. If you file an appeal today, first of all, the DG has up to 12 months to review and thereafter if the DG feels this is not a matter that can be settled or if parties are unable to settle the matter, then only the matter gets transmitted to the SCIT. And the SCIT’s workload is so heavy, they will give you a hearing date in two or three years’ time.

“Not that they are not trying to accommodate because I know in matters that I’ve handled, when I begged and pleaded they have tried to give very early dates. But the truth of the matter is, their diaries are packed and everyone needs a quick solution to a problem especially when the problem requires you to pay first, argue later,” he said.


Tr-Mode System hopes to raise RM26m from IPO

PETALING JAYA: Logistics service provider Tri-Mode System (M) Bhd is looking to raise RM26.36 million through its initial public offering (IPO) at an issue price of 61 sen per share.

The company is scheduled to be listed on May 11 on the ACE Market of Bursa Malaysia.

Tri-Mode’s IPO involves a public issue of 43.21 million new shares comprising an institutional offering of 30.71 million shares and a retail offering of 12.5 million shares.

Of the retail offering, 8.3 million shares are available to the public, and 4.2 million to eligible persons. Applications for the retail portion will close at 5pm on April 26.
Upon listing, it will have a market capitalisation of RM101.26 million based on an enlarged issued share capital of 166 million shares.

Founded in 1992, Tri-Mode is engaged in the provision of sea freight, container haulage, air freight, freight forwarding, warehousing and marine insurance services.

About 58.8% of the IPO proceeds will be used for business expansion via the construction of a proposed headquarters and distribution hub and purchase of prime movers and trailers; 8.9% for working capital; 19% for the repayment of bank borrowings; and 13.3% to defray listing expenses.

Tri-Mode managing director Datuk Hew Han Seng said the listing exercise will provide the needed financial impetus for the group to pursue business expansion strategies and to establish market awareness of its brand within the logistics industry.

For the financial year ended Dec 31, 2017, it reported a net profit of RM6 million, a 28.5% rise from RM4.67 million a year ago.


US stocks mixed as rally loses steam, IBM tumbles

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Pacquiao to launch own cryptocurrency

MANILA, April 18 — Philippine boxing icon Manny Pacquiao said today he would launch a cryptocurrency to connect with fans, but also backed the regulation of virtual currencies. Pacquiao, one of the world’s most successful boxers, is the…


EU says US tariffs distorting global trade

STRASBOURG, April 18 — US steel and aluminium tariffs are already distorting global trade and could undermine the world economic recovery, the EU’s top trade official Cecilia Malmstroem warned today. Malmstroem said the European Union…


IMF: As China, US continue to borrow, mounting debt a global liability

WASHINGTON, April 18 — As world borrowing levels hit fresh records, the United States and China stand out among the biggest debtors, creating risks to the global economy, the International Monetary Fund said today. Mounting government deficits…


Implementing GST doesn’t mean you must reduce income tax: Expert

KUALA LUMPUR: The corporate tax rate has been reduced from 28% in 2006 till 24% today, reflecting a 4% drop, said YYC KK Chow Tax Sdn Bhd executive director Zen Chow.

“A lot of us will think that once GST (Goods and Services Tax) is introduced, there should be some gradual reduction in income tax and that has been the practice in a lot of countries. So, is there any gradual reduction actually in Malaysia? GST was introduced in 2015 and indeed there was a gradual reduction, a slight reduction of 1% in the Malaysian corporate tax rate,” he said at the Malaysian Tax Conference 2018 today.

The corporate tax rate was reduced from 25% in year of assessment 2015 to 24% in year of assessment 2016. However, Chow said the 1% reduction is an additional reduction on top of the 3% reduction since 2007, when GST was supposed to be implemented.

“Way back in Budget 2007, the then prime minister Tun Abdullah Ahmad Badawi announced that GST will be implemented from Jan 1, 2007. At that point of time, he mentioned that once GST is introduced, he will slowly reduce the corporate tax rate and individual tax rates. So, we should be fair by looking way back to 2007 and see if there was any reduction in income tax,” he said, adding that the reduction in corporate tax rate was not deferred although GST was deferred.

In comparing with other countries, Chow said Singapore and the Philippines saw their income tax rates gradually reduced while GST was gradually increased and in Vietnam, corporate tax was reduced while GST rate remained.

“That doesn’t mean every country does this. If you take Australia for example, there was no reduction in corporate tax rate when GST introduced, until today it is still at the same rate. The GST rate also remained the same. This shows that it doesn’t mean that you always have to reduce your income tax rate when you introduce GST,” he added.

Meanwhile, on the joint audits carried out by the Royal Malaysian Customs Department (Customs) and the Inland Revenue Board (IRB), Chow said there could be more synergy and interaction between the two authorities.

“There have been instances already where both authorities went in to the premises of taxpayers to do a joint audit. However, when they went to the premises, IRB would audit on their income tax part and the Customs would audit on their part. We don’t see a synergy between these two authorities.

“The fact is, since they went in together, they call it a joint audit, however when it comes to work, it seems like Customs are doing their own work and IRB also doing their own work. I would say joint audit is good but we hope to see more interaction between these authorities when they go in, so that the audit would be more efficient,” he said.

Recall that the two authorities signed the Standard Operating Procedure Audit Programme in August last year.


‘Reducing corporate tax rate not necessity’

KUALA LUMPUR: The corporate tax rate has been reduced from 28% in 2006 till 24% today, reflecting a 4% drop, said YYC KK Chow Tax Sdn Bhd executive director Zen Chow.

“A lot of us will think that once GST (Goods and Services Tax) is introduced, there should be some gradual reduction in income tax and that has been the practice in a lot of countries. So, is there any gradual reduction actually in Malaysia? GST was introduced in 2015 and indeed there was a gradual reduction, a slight reduction of 1% in the Malaysian corporate tax rate,” he said at the Malaysian Tax Conference 2018 today.

The corporate tax rate was reduced from 25% in year of assessment 2015 to 24% in year of assessment 2016. However, Chow said the 1% reduction is an additional reduction on top of the 3% reduction since 2007, when GST was supposed to be implemented.

“Way back in Budget 2007, the then prime minister Tun Abdullah Ahmad Badawi announced that GST will be implemented from Jan 1, 2007. At that point of time, he mentioned that once GST is introduced, he will slowly reduce the corporate tax rate and individual tax rates. So, we should be fair by looking way back to 2007 and see if there was any reduction in income tax,” he said, adding that the reduction in corporate tax rate was not deferred although GST was deferred.

In comparing with other countries, Chow said Singapore and the Philippines saw their income tax rates gradually reduced while GST was gradually increased and in Vietnam, corporate tax was reduced while GST rate remained.

“That doesn’t mean every country does this. If you take Australia for example, there was no reduction in corporate tax rate when GST introduced, until today it is still at the same rate. The GST rate also remained the same. This shows that it doesn’t mean that you always have to reduce your income tax rate when you introduce GST,” he added.

Meanwhile, on the joint audits carried out by the Royal Malaysian Customs Department (Customs) and the Inland Revenue Board (IRB), Chow said there could be more synergy and interaction between the two authorities.

“There have been instances already where both authorities went in to the premises of taxpayers to do a joint audit. However, when they went to the premises, IRB would audit on their income tax part and the Customs would audit on their part. We don’t see a synergy between these two authorities.

“The fact is, since they went in together, they call it a joint audit, however when it comes to work, it seems like Customs are doing their own work and IRB also doing their own work. I would say joint audit is good but we hope to see more interaction between these authorities when they go in, so that the audit would be more efficient,” he said.

Recall that the two authorities signed the Standard Operating Procedure Audit Programme in August last year.


Bumi Armada still a ‘buy’ despite problems in Nigeria operations

PETALING JAYA: Analysts have not changed their call on Bumi Armada Bhd despite continued problems at its Nigerian operations.

AmInvestment Bank Bhd is keeping its “buy” recommendation on Bumi Armada Bhd with an unchanged forecasts and fair value of RM1.22 per share.

In a note today, the research house said it continues to view the risk profile of the group as substantively improved with its clientele’s upcoming full acceptances of the floating production, storage and offloading (FPSO) vessels Olombendo and Kraken, supported by minimal Q4’17 impairment charges.

On Tuesday, the group announced that it had received a notice from Erin Petroleum Nigeria Ltd, requesting immediate shutdown of operations on its wholly owned FPSO Armada Perdana, which is currently operating in OML 120 block, Oyo field, off Nigeria.

It also received a notice of seizure of crude oil produced and to be produced there.

Recall that in June last year, Bumi Armada suspended Armada Perdana’s operations following irregular payments for the operation and maintenance (O&M) services together with long-delayed charter payments by Erin Energy Corp.

However, since then, the group has allowed oil to be produced from the field to flow into Armada Perdana’s cargo tanks.

As Erin’s debts are still outstanding even after a series of meetings with Nigeria’s Department of Petroleum Resources and Erin Energy, the oil was not to be offloaded from Armada Perdana until a debt resolution was reached with the stakeholders.

AmInvestment said it sees this as a negative development as it understands that the announced FY18 credit risk impact estimated at RM30 million (7% of FY18 earnings) involves the demobilisation of the vessel from the field, and not the remaining outstanding debt of Erin, of which some provisions have already been made.

“As negotiations were still ongoing, management has not revealed the full potential outstanding claim against Erin at this stage, which involves a shutdown, not a termination of the charter contract,” it added.

On a separate note, PublicInvest Research said while the news flow is negative, the research house is neutral on this development as issues with Erin is common knowledge and had already been ongoing since 2015.

“Our earnings estimates and valuations have already excluded these contributions much earlier. We retain our “neutral” call with an unchanged target price of 90 sen,” it said.


Bumi Armada still a ‘buy’ despite woes in Nigeria ops

PETALING JAYA: Analysts have not changed their call on Bumi Armada Bhd despite continued problems at its Nigerian operations.

AmInvestment Bank Bhd is keeping its “buy” recommendation on Bumi Armada Bhd with an unchanged forecasts and fair value of RM1.22 per share.

In a note today, the research house said it continues to view the risk profile of the group as substantively improved with its clientele’s upcoming full acceptances of the floating production, storage and offloading (FPSO) vessels Olombendo and Kraken, supported by minimal Q4’17 impairment charges.

On Tuesday, the group announced that it had received a notice from Erin Petroleum Nigeria Ltd, requesting immediate shutdown of operations on its wholly owned FPSO Armada Perdana, which is currently operating in OML 120 block, Oyo field, off Nigeria.

It also received a notice of seizure of crude oil produced and to be produced there.

Recall that in June last year, Bumi Armada suspended Armada Perdana’s operations following irregular payments for the operation and maintenance (O&M) services together with long-delayed charter payments by Erin Energy Corp.

However, since then, the group has allowed oil to be produced from the field to flow into Armada Perdana’s cargo tanks.

As Erin’s debts are still outstanding even after a series of meetings with Nigeria’s Department of Petroleum Resources and Erin Energy, the oil was not to be offloaded from Armada Perdana until a debt resolution was reached with the stakeholders.

AmInvestment said it sees this as a negative development as it understands that the announced FY18 credit risk impact estimated at RM30 million (7% of FY18 earnings) involves the demobilisation of the vessel from the field, and not the remaining outstanding debt of Erin, of which some provisions have already been made.

“As negotiations were still ongoing, management has not revealed the full potential outstanding claim against Erin at this stage, which involves a shutdown, not a termination of the charter contract,” it added.

On a separate note, PublicInvest Research said while the news flow is negative, the research house is neutral on this development as issues with Erin is common knowledge and had already been ongoing since 2015.

“Our earnings estimates and valuations have already excluded these contributions much earlier. We retain our “neutral” call with an unchanged target price of 90 sen,” it said.