IRB didn't revoke tax-exempt status of Utar and foundation - Lim

The Inland Revenue Board (IRB) denied it revoked the tax-exempt status of Universiti Tunku Abdul Rahman (Utar) and the Utar Education Foundation (Utaref), which was reported by local media today.

Deputy Finance Minister Lim Hui Ying said the tax-exempt status of Utaref, granted under Section 44(6) of the Income Tax Act 1967 on July 1, 2003, remains unchanged and has never been revoked.

As for Utar, the IRB clarified that no tax-exempt status was ever granted to the university under Section 44(6), said Lim in a statement today.

“IRB has informed me that it is incorrect to state that the tax-exempt status of Utar and Utaref has been revoked.

“The IRB maintains that Utaref and Utar are treated as two different entities for tax purposes.

“Accordingly, the IRB contends that income generated by Utaref continues to enjoy tax-exempt status, whereas income generated by Utar does not.”

However, she said, Utar claims income generated by it is similar to that of Utaref.

Hence, Utar is currently appealing to the Finance Ministry regarding the IRB’s decision to impose outstanding taxes and penalties amounting to RM83 million on Utar’s income.

“I have expressed to the IRB the public’s concerns about whether this represents a new tax formula aimed at collecting additional revenue for the government.

“The IRB assures me that this is not the case and that they are adhering to existing conditions and guidelines governing institutions granted tax-exempt status.”

She said Utar’s appeal is currently being processed by the Tax Division of the Finance Ministry and she will follow up in the hopes a satisfactory resolution can be achieved.

Questions raised on expanding taxes

A Sin Chew Daily report today questioned whether the government, to expand its tax revenue base, has begun to collect income tax from private universities and charitable organisations that were previously exempted from taxes.

The report claimed Utaref was recently slapped with a tax bill, including fines of up to 45 percent, amounting to more than RM83 million.

Quoted sources revealed that this move by the IRB indirectly meant the tax-exempt status the foundation had enjoyed since 2003 was revoked.

The report further stated that after receiving the massive tax bill, the foundation wrote to Prime Minister and Finance Minister Anwar Ibrahim in June, requesting the renewal of its tax-exempt status and the cancellation of the tax arrears and fines.

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