Foreign donations taxable on case-by-case basis

: Foreign donations are subjected to tax on a “case-by-case” basis, said Inland Revenue Board (IRB) CEO Datuk Seri Sabin Samitah.

“I need to see the facts. I cannot generalise (whether foreign donations are taxable). We have to look on a case by case basis,” Sabin said in response to the additional tax bill of around RM1.5 billion slapped on former prime minister Datuk Seri for the period of 2011-2017.

He declined to comment further, saying that IRB is bound by the secrecy provision.

“We’re not allowed to discuss individual tax matters with the public,“ he told reporters at the Malaysian Tax Conference 2019 today.

Meanwhile, Axcelasia Inc group chairman Dr Veerinderjeet Singh said there is no law that states that foreign donations are not taxable.

“Just because something is a donation, doesn’t mean it’s exempt. I cannot find any section in the law which gives you an exemption. Terminology is not the way out,” he stressed.

Najib insisted that the foreign political donations from foreign countries were not subjected to local tax laws, saying that he will seek a review of the “very unjust” action.

Veerinderjeet said at the end of the day, the IRB has to establish its facts first, otherwise it would not raise an assessment on Najib.

Interestingly, he pointed out that Malaysian tax laws state that tax is payable notwithstanding an appeal.

“Our tax laws say even though you appeal, you must make the payment of the tax. But you can also have good lawyers who go to court and get a stay of proceedings in terms of delaying the payment. That’s possible.”

Earlier in his keynote address, Sabin said those who have fully decided to not comply with the existing tax laws, IRB will not hesitate to use the full force of the law, in order to uphold the integrity and fairness of the tax system.

“On one hand, we (IRB) pledge to make fulfilling tax obligations an easy task. On the flip side, IRB will show no fear or favour in bringing individuals involved in tax crimes to justice,” said Sabin.

He said the changing outlook in the international tax arena requires IRB to be adaptive to this change. With the existence of creative practices in evading and avoiding taxes, there is a need to not only protect the tax revenue of the country, but also to combat any tax crime at the international level.

“Being a member of the OECD Global Forum allows IRB to be abreast with the latest developments at the international front, making it easier to design tax laws and policies which move along this evolvement.”

For most tax authorities, he said audits are an important means of determining broader compliance levels and shaping compliance.

“Be rest assured that IRB sees audits as a means of educating these group of people who do not comply and IRB fully adheres to the audit framework in place. In fact, we have taken a stand to further reduce disruptions caused to taxpayers by focusing on desk audits and limiting the time-frame of audits to two years of assessment, unless there is an issue of willful evasion or avoidance.”

IRB collected direct tax of RM137.04 billion last year, an increase of 11.13% compared with the amount collected in 2017. He said IRB’s performance throughout the years has always reflected a positive correlation to the country’s gross domestic product.

“For 2019, we have been entrusted to deliver RM147 billion to the government. We are on track in terms of delivering the target set, and will work towards meeting it by the end of the year.”

Source: The Sun Daily

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