There is no law that says that foreign donations are exempted from taxes, says tax expert Veerinderjeet Singh.
He said that the only donation exempted from tax is from parents and loved ones as those are considered as gifts and have nothing to do with services rendered.
“If someone gets a donation, but not from parents or a child, the question arises: why did you get it?” he said on the sidelines of 'Malaysia Baru’s Tax Reform Agenda – What’s Next?' conference today.
He added that if the funds had gone to a political party, it would be viewed from a different perspective.
“If the party received it, it is not taxable. It is taxable if the funds were divested into property and such. But when an individual receives it, that’s different,” he said, adding that it was important to establish the main purpose of the donation and its origin.
Veerinderjeet was answering questions on former prime minister Najib Abdul Razak's reported RM1.5 billion tax bill, which includes an alleged RM2.6 billion donation from Saudi Arabia.
The former premier later insisted that income in the form of political donations from foreign countries, is not subject to local tax laws.
Earlier, Inland Revenue Board chief executive officer Sabin Samitah said that the tax on foreign donations or income would be reviewed on a case-by-case basis.