Federal minister from Sarawak reassures religious organisations that amendment to income tax act is to ensure individuals using religion for personal gain will pay tax.
PETALING JAYA: A federal minister from Sarawak has weighed in on the controversial income tax amendment passed last month, that could make religious organisations liable to pay some tax on their income.
Natural Resources and Environment Minister Wan Junaidi Tuanku Jaafar said the amendment to the law affecting religious organisations was targeting only individuals, The Borneo Post reported.
“The new amendment to the tax law is to ensure that taxes are imposed on individuals who use religion to benefit themselves, and not for religious purposes.
“All religious institutions or organisations should not fear being taxed as they qualify for tax exemptions as long as their income is for religious activities,” the Santubong MP from PBB said, according to the Sarawak-based daily.
He added that the amendment explicitly stated that religious institutions and organisations qualified for tax exemption.
“If their income from donations contributed by followers or from rental of the properties are solely for the purpose of religious worship activities or the advancement of religion, then they automatically qualify for the tax exemption,” he was quoted as saying by The Borneo Post.
He added that he was clarifying the issue to clear the misunderstanding about the amendment, which he claimed had since been manipulated by the opposition.
Various non-Muslim bodies and religious institutions have questioned the passing of the amendment as it was feared that tax may have to be paid on income derived from some types of donations.
According to the finance ministry, the amendment to paragraph 13(1)(b) Schedule 6 Income Tax Act 1967 (Act 53) in Budget 2017 seeks to provide clarity of law on the application of exemption to religious institutions or organisations.
Prior to this amendment, some confusion arose among taxpayers as to whether religious institutions or organisations automatically qualified for exemption under the Act, or if they were required to obtain approval from the IRB director-general under Section 44(6) Act 53.
Despite reassurances from the finance ministry, Borneo Post earlier reported a tax consultant as warning that the wording of the amendment was subject to interpretation and could impact religious bodies regardless of what the donations were used for.
The tax consultant said the IRB must confirm and issue a Public Ruling on the amendment so as to ensure that religious bodies were not going to be penalised arbitrarily later.
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