Several Islamic organisations are fearful that a newly-passed tax on religious bodies will eat into their tiny funds, after churches first raised concern over the issue.
Malaysia Consultative Council of Islamic Organisation (Mapim), an umbrella body representing several Muslim groups, said the new tax is not in favour of civil societies as it will hamper the whole operation of a non-profit organisation.
“Whenever people donate, we will use the money for special charity, and that money should not be used for other things.
“But what about the running of the organisation? We need to have income-generating activities, but if that is taxed, then it will be difficult for civil societies or charitable organisations to function,” Mapim president Azmi Hamid told Malay Mail Online when contacted yesterday.
He believed the group will be affected by the amended law as some of its branches generate income by organising courses.
“It will affect [us] because we have branches and they are also trying to raise fund on their own either through donations or even small activities where we charge people for attending some courses we offer.
“So the money is being used to cover the overhead expenses of the organisation,” he said, adding that Mapim has not received any official notice from Putrajaya over the matter.
The Income Tax Act’s Schedule 6, which lists down income which is exempt from tax, includes under item 13(1)(b) “a religious institution or organisation which is not operated or conducted primarily for profit and which is established in Malaysia exclusively for the purposes of religious worship or the advancement of religion”.
However, in the Finance Bill 2016 that was passed in the Dewan Rakyat on November 23 and by the Dewan Negara on December 15, an additional requirement that the income be meant for “charitable purposes” was introduced, starting year of assessment 2017 and onwards.
Tax experts told Malay Mail Online the amended law will start taxing income generated from activities such as rental, interest from fixed deposits, the running of religious classes, religious ceremonies, fees for religious services, seminars.
However, the lack of information regarding the proposal has caused confusion among religious bodies, with the Sabah Council of Churches claiming in its Christmas address that the amendment involves only non-Muslim religious bodies.
Last week, local paper The Borneo Post also reported that mosques and Muslim welfare bodies in Sarawak would purportedly not be affected by the amendment as they fall under state Islamic law, the Majlis Islam Sarawak Ordinance 1984.
The chairman of another umbrella Muslim body, Allied Coordinating Committee of Islamic NGOs (ACCIN), Shahrin Awaludin meanwhile warned that there may be resistance towards enforcement of the new tax.
“We have to make various efforts to cover expenses for our activities, so it is not justifiable if [we are] being taxed. Our income is insufficient to run the operation.
“Income for NGOs comes from various activities, not only donations,” he said, adding that 18 non-profit NGOs under ACCIN also organise various activities to cover their operations.
He said the government needs to clarify and give proper explanation over the matter as no information has been given to them so far.
Azmi also said it is important for the government to explain how and on what basis that it will impact civil societies who are doing charitable activities.
“The government should look at NGOs’ income-generating activities not as income per se for the organisations, but also as a way for organisations to function without depending on donations to support their organisational expenses.”
Source : MELATI A. JALIL @ The Malay Mail Online