Effective Jan 1 2017, religious institutions or organisations need to pay tax for their incomes derived from businesses or rental.
Corporate Communications and Multimedia Division of Corporate Services Department of Inland Revenue Board (IRB) yesterday confirmed this in a statement following the concern raised by Dr Chou Chii Ming, chairman of Kuching Chinese Community Charitable Trust Board, in an article published by The Borneo Post on Dec 16.
“The amendment to paragraph 13(1)(b) of Schedule 6, Act 53 explicitly provides that religious institutions or organisations automatically qualify for the exemption on income from donations contributed by religious worshippers solely for the purpose of religious worship activities or the advancement of religion. This exemption is applicable to all religious institutions or organisations,” the statement clarified.
It further said: “Income from business or rental are income taxable under Act 53 and are outside the scope of income which is exempted under Schedule 6. The taxable income is income after deducting all expenses incurred in the production of said business or rental income. This treatment is consistent with the principles under Act 53.”
IRB justified that the amendment to paragraph 13(1)(b) of Schedule 6 Income Tax Act 1967 (Act 53) in Budget 2017 seeks to provide clarity of the law on the application of exemption to religious institutions or organisations.
“Prior to this amendment, there has been some confusion among taxpayers as to whether or not religious institutions or organisations automatically qualify for the exemption under 13(1)(b) Schedule 6 or are required to obtain approval from the director general of Inland Revenue under Ssection 44(6) Act 53,” it added.
The amendment to the Income Tax Act was passed by the Senate on Dec 16 with no objections from both sides of the political divide. The amendment was passed in Parliament on Nov 23,
The Borneo Post has been in contact with Inland Revenue Board (IRB) since Dec 19 seeking for a clarification to the amendments.
Earlier, IRB’s officer in charge of media enquiries Masrun Maslim said information on the amendments was channelled via Parliament, when asked why the religious organisations were not informed before the amendments.
“Why should we inform every amendment to all? Please be logical…information channel is via parliament, meaning every MP as a representative will be informed when we table (sic) the amendment.
“This is not a business anyway…this is for the nation. I am sure that every issue has been considered before we propose the amendment.”
In responding to the admission by Seputeh MP Teresa Kok (DAP) that the MPs could have slipped past the Bill as there had been many Bills requiring their attention, Masrun said it was beyond IRB’s control when the lawmakers overlooked this matter.
Masrun also said the Tax Division of the Ministry of Finance would provide clarification on the matter and IRB would not be issuing any statement.
Source : Phyllis Wong @ The Borneo Post Online