Political donations are not subject to income tax as such donations are not considered an "income", says a tax expert.

"The law is very clear. Donations are not an ‘income’, so there's nothing to tax," Chartered Tax Institute of Malaysia (CTIM) president SM Thanneermalai told Malaysiakini .

Thanneermalai said the issue was very simple in that as long as it was a donation, one does not even have to declare it.

He was responding to the Inland Revenue Board (IRB) chief executive officer Mohd Shukor Mahfar's comment yesterday that political donations are not subjected to tax.

The IRB chief's comment comes after former prime minister Dr Mahathir Mohamad called for Prime Minister Najib Abdul Razak's personal income tax records to be examined with regard to the RM2.6 billion donation transferred into Najib’s personal bank accounts.

Also last August, Mahathir called on the tax authority to act against Najib.

"The question I wish to ask is whether the Inland Revenue Board has acted on the RM2.6 billion that was in Najib's personal accounts," Mahathir said.

Thanneermalai said the tax authorities could try investigating a donation made, but as long as one could prove that it was indeed a donation, then "the matter closes there".

'It is nothing complicated'

He added, "It is nothing complicated. As long as it is a donation, it stops there."

The RM2.6 billion funds in Najib's personal bank accounts was first revealed in a report by The Wall Street Journal in July last year, which cited leaked investigation papers.

Najib later claimed that the money was a political donation from the Middle East.

The MACC later concurred that it was a donation and pursued an investigation, together with a separate one into the deposit of RM42 million from state-owned SRC International Sdn Bhd into the prime minister's personal bank accounts.

MACC was reported to have submitted its investigation papers to attorney-general Mohamed Apandi Ali last December.

Apandi rejected the investigation report and instructed the MACC to drop the case, saying he was "satisfied that no criminal offence had been committed by the prime minister".

However, MACC has decided to appeal the decision and is due to meet with the attorney-general this afternoon .