PKR Sarawak welcomes the announcement by Second Finance Minister Datuk Johari Abdul Ghani that an exemption order under Section 127 of the Income Tax Act 1967 will be issued to maintain the tax exemption status of religious institutions.
Its vice-chairman See Chee How said the party maintained that it was an ambiguous and unpleasant exploit of the federal government to amend Paragraph 13(1)(b) of Schedule 6 of the Income Tax Act 1967 at the last Parliament sitting, to distinguish direct contributions of members of religious fraternity with such earnings, interests and dividends of charities and charitable trusts and institutions which are also for the purpose of advancement of their religion.
“However, the extent of the proposed exemption order is still vague. I hope the draft of the proposed exemption order will be transmitted to all religious institutions and Sarawak state government for their study and feedbacks,” he told The Borneo Post recently.
See, who is Batu Lintang assemblyman, opined that it would have been more appropriate and provide certainty to the tax exemption status of religious charities and institutions if the federal government could grant them the same status as those public or benevolent institutions and institutions and organisations advancing medical, educational and training, approved under Section 44(6) of the Income Tax Act.
“In Sarawak, particularly, the religious charities and institutions are concerned primarily with the advancement of their religions, but at the same time also promoting and carrying out activities which are of public and benevolent in nature.”
See said it was also imperative for the state government to make a representation and assert Sarawak’s authority with regards to the levy and exemption of taxes on the incomes of all charities, charitable trusts and institutions including religious charities and institutions incorporated and operated in Sarawak.
“We have legislative power over all charities, charitable trusts and institutions incorporated and operating in Sarawak, by virtue of the Supplement to the Concurrent List for State of Sabah and Sarawak of the Tenth Schedule of the Federal Constitution.
“Therefore, taxes, if any, should go into the State Consolidated Fund. It is the authority of the state government to collect, exempt or rebate those taxes.”
See also urged the state government to clarify with the federal government and assert those autonomous powers.
According to him, this would enable all charitable and trust bodies of religious, public and benevolent nature, including those promoting and advancing education in Sarawak, to be registered under the Charitable Trusts Ordinance 1994.
“This would protect and safeguard Sarawak’s interests and rights, in view of our unique socio-cultural and educational background and needs.”
See said the state government should ask that all these religious and charitable trust institutions or organisations incorporated and operating in Sarawak be approved by the director-general of Inland Revenue Board for the purposes of Section 44(6) of the Income Tax Act.
He also called on all Sarawakian members of the federal cabinet, MPs and senators to be more alert and vigilant in safeguarding the state’s rights and interests.
A senior tax consultant agreed with See in calling on Sarawakian members of the federal cabinet, MPs and senators to be more alert and vigilant in safeguarding our state’s rights and interests.
“We hope that all our MPs especially those from Sarawak take careful note of the exemption order.
“Do not let it (amendment to Income Tax Act 1967) in the future be approved anyhow without making sure that all incomes of religious institutions are tax exempt as before,” the senior tax consultant told The Borneo Post yesterday.
He was relieved that the federal government had at least understood the confusion arising from the proposed amendment and agreed to issue the exemption order for all the incomes of religious institutions.
“But we still need to study the language used in the exemption order first.”
The senior tax consultant explained: “The proposed exemption order would be issued under Section 127(2)(b) of Income Tax Act which reassesses as follows:
“Section 127(2)(b) of Income Tax Act says: The Minister may by statutory order (b) exempt any class of persons from all or any of the provisions of this Act, either generally or in respect of any income of a particular kind or any class of income of a particular kind.
“Under Section 127(3A), the Minister may, in any particular case exempt any person from all or any of the provisions of this Act, either generally or in respect of any income of a particular kind or any class of income of a particular kind.
“Under Section 127(4), any orders made under Subsection (3) shall be laid before the Dewan Rakyat.”
Source : Jonathan Chia @ The Borneo Post Online