The Parti Bersatu Sabah (PBS) is happy over a pledge by Second Finance Minister Johari Abdul Ghani to exempt all types of income of religious institutions registered with the Registrar of Societies or under any written law regulating the institution, from tax.

PBS secretary-general Johnny Mositun said Johari’s decision should put to rest any fear that churches, temples and religious institutions in the country would have to begin paying tax.

"The confusion has been cleared up. It was all a misunderstanding that led to church leaders and temple committees fearing their organisations would lose their tax-exempt status.

"We are relieved that it is not so,” he said in a statement in Kota Kinabalu today.

The PBS, said Mositun, commended the Finance Ministry for the clarification and reaffirmation that religious bodies were tax exempted, adding “this is consistent with PBS’ and Barisan Nasional’s stand.

In its last sitting, Parliament had passed an amendment to the Income Tax Act 1967 that tightened the rules for tax exemption on non-governmental religious organisations in the country.

Unlike mosques and most Islamic institutions which are government-owned, churches, temples and other places of worship are not.

State leaders in Sabah and Sarawak, states with large Christian populations said they were not prepared to accept the amendment if it discriminated against non-Islamic institutions.

Last week, Sabah Chief Minister Musa Aman, his deputy and PBS president, Joseph Pairin Kitingan and PBS acting president, Dr Maximus Ongkili, among others, urged a full explanation from Putrajaya on the amendment.

Prime Minister Najib Abdul Razak had promised to bring up the matter in last week’s cabinet meeting.

"The prime minister kept his word. The second finance minister had a meeting with representatives of religious institutions on Jan 9, during which the matter was cleared up and the minister said he would be issuing the letter of exemption.

"So, any fear that this amendment would victimise private religious institutions should no longer be entertained,” Mositun pointed out.

He said PBS, for now, acknowledged the rationale of a prerequisite for religious institutions and organisations to be registered to qualify for tax exemption.

He added the amendment to the Income Tax Act 1967 was actually aimed at protecting the religious institutions themselves from being exploited by individuals or groups that exploited their tax-exempt status for questionable reasons, including fraud, theft, self-enrichment and in extreme cases, to carry out undesirable and non-religious activities.

- Bernama