Ministers to study income tax amendment

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KUCHING:  Deputy Chief Minister Datuk Amar Abang Johari Openg and Second Finance Minister Dato Sri Wong Soon Koh will look into the implications of the new amendment to Paragraph 13(1)(b) of Schedule 6 of the Income Tax Act 1967.

Both said they were not completely sure of what the amendment entailed and would have to look into it before bringing the subject to the state cabinet for discussion.

“At the moment, a thorough study has to be made on its implications,” Abang Johari told The Borne Post yesterday, adding that the cabinet would come out with a stance after the discussion on the issue.

Wong on the other hand said he had been following the issue which has been highlighted by The Borneo Post.

“I have been following closely on all the reports on the new amendments to Paragraph 13(1)(b) of Schedule 6 of the Income Tax Act 1967.  It seems to me that there is still much confusion over the interpretation of the amendment.

“My ministry will get in touch with the Finance Ministry to get the official interpretation of the amendments and its implications.

“After that I will bring the case to the cabinet for discussion.  Of course, one of the major topics would be whether the state could in anyway help the religious bodies and charitable organisations in Sarawak not to be affected by the amendment,” said Wong.

Meanwhile, president of Federation of Chinese Associations of Kuching, Kota Samarahan and Serian Dato Richard Wee was concerned that the amendment could adversely affect social and charitable bodies.

“The amendment will affect all non-profitable bodies and associations including all the clan associations such as the Hokkien Association and the Foochow Assocations.

“We are all right with taxation on profits from investment such as rental collected and so on for non-profitable organisations.  But we are against any form of taxation on donations and contributions which private independent schools, temples and Churches are relying to survive,” said Wee.

He added that charitable bodies such as schools, temples and Churches should not be taxed.

“We don’t understand what the federal government is doing.  They are always making policies that frustrate the people.  Our only saving grace is the state government.  We hope that the state government could come up with something to stop the implementation of the amendment in the state,” said Wee.

The confusion over the amendment ensued after it was passed by the Parliament on Nov 23 and the Senate on Dec 16 with no official explanation.

As the wordings on the amendment were ambiguous, the new ruling was subjected to various interpretations by lawyers and accountants.

Finance Minister II Datuk Johari Abdul Ghani explained that the amendment was to mend loophole in the Act to ensure religious bodies would not use the contributions from donors to gain profit from business activities while enjoying free-tax status.

The Inland Revenue Board (IRB) clarified that donations to all religious and charitable bodies will remain tax exempt after the amendment but incomes arising from business activities or rental will be taxable.