IRB: Foreign donations taxable on ‘case-by-case’ basis

KUALA LUMPUR: Foreign donations are still subject to tax on a ‘case-by-case’ basis, says the Inland Revenue Board (IRB) CEO Datuk Seri Sabin Samitah.

“I need to see the facts and I cannot generalise.

“I need to see (it) and it depends on a case-by-case basis,” he said on the sidelines of the Malaysian Tax Conference 2019.

When asked to comment on reports that ex-Prime Minister Datuk Seri Najib Razak had been slapped with an additional tax bill, Sabin said that he was bound by secrecy laws.

“I cannot comment on this specifically at the moment because we are bound by the secrecy provisions and are not allowed to discuss individual tax matters with the public,” he said.

Commenting on the same matter, the Malaysian Institute of Accountants (MIA) chairman of the taxation practice committee Veerinderjeet Singh said there was currently no law that stated that foreign donations were exempted from taxes.

The tax expert, however, noted that a donation would be tax-exempt if it originally came from a person’s family.

“If someone gets a donation, but (it is) not from the parents or a child, the question then arises: Why did you get it?” he said.

“The law does state that foreign income is exempt.

“It says foreign income that is derived from Malaysia is exempt. Income that is earned in Malaysia is taxable: even though it is paid overseas, but many people don’t report it because they think it is not (taxable),” Veerinderjeet added on the sidelines of the conference.

Meanwhile, when asked what were the changes that would be seen in the IRB with the Pakatan Harapan government in charge, Sabin said: “It is the same actually, nothing’s changed.

“What will change is the transformation within the IRB that will see an IT transformation. We will be more data-driven, moving forward,” he said.

Commenting on the Special Voluntary Disclosure Programme (SVDP), Sabin said that he was “quite happy” with the outcome of the programme so far, but said the amount of collections would be left to the government to announce.

“The pick-up in (collections) is getting better actually. I’m happy to note that many have come forward during the first five months of the SVDP,” he said.

Earlier in his speech at the Malaysian Tax Conference 2019, he said that the first phase of the SVDP had just ended and it was now time for the second phase of the programme.

“A lot of attention has been centered on the SVDP in the first five months of this programme.

“This programme provides an avenue for those with overseas bank accounts to come clean on tax affairs.

“This is especially if the income is derived from Malaysia and has yet to be reported for tax purposes,” he said.

On tax collections, the IRB said that they were on track to meet its tax collection target of RM147bil.

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