KUALA LUMPUR: A promised 10-year income tax exemption for Tunku Abdul Rahman University of Management and Technology (TAR UMT) has instead been approved for only three years, prompting the institution to appeal what it describes as an unfair and damaging decision.
MCA president Datuk Seri Dr Wee Ka Siong, who is chairman of the TARC Education Foundation, said the foundation had recently received an official letter from the Finance Ministry granting a three-year tax exemption from Jan 1, 2026, to Dec 31, 2028, despite Prime Minister Datuk Seri Anwar Ibrahim publicly announcing in February that all education foundations would automatically receive a 10-year extension.
Dr Wee said the approval fell far short of the Prime Minister's commitment and imposed new conditions that would significantly affect the university's finances and operations.
"We only ask the government to return what we have always had. We are not asking for any special privilege or additional benefit," he told a press conference on Monday (July 6).
According to Dr Wee, the new exemption applies only to public donations, while tuition fees, rental income and interest income, the university's main operating revenue, would now be subject to taxation.
He said the move contradicted the original purpose of the tax exemption, as every ringgit earned by the university had always been reinvested into education, campus development and student facilities.
"We are not a charity organisation. We are running a university. Tuition fees are used to pay lecturers' salaries, maintain facilities and provide affordable education.
“To treat tuition fees as taxable income goes completely against how this university has operated for decades," he said.
Dr Wee also questioned why the Finance Ministry had shortened the exemption period from 10 years to three years after the Prime Minister's announcement on Feb 4 during his visit to TAR UMT.
"If the Prime Minister announced 10 years, and we receive only three years with conditions that completely change how we operate, who are we supposed to believe?" he asked.
He said TARC Education Foundation's tax-exempt status expired on Jan 1 this year, and the foundation had submitted its renewal application more than a year ago to avoid disruption to the university's operations.
Dr Wee said the foundation only received the Finance Ministry's letter dated June 18 in recent weeks.
Besides reducing the exemption period, he said the ministry also introduced conditions requiring the foundation to establish a separate fund and comply with new Inland Revenue Board (LHDN) guidelines that were impractical for a non-profit university.
Among them, he said, were restrictions limiting the amount of tax-exempt income that could be spent on operating expenses, which would make it impossible for the university to continue allocating about 75% of its revenue to lecturers' salaries and educational expenses.
"You are asking us to comply with conditions that are impossible to fulfil. Our primary mission is education, not accumulating funds," he said.
Dr Wee also criticised what he described as allegations by the Finance Ministry that TARC Education Foundation needed to strengthen its governance and improve the management of donations.
He said the accusations were baseless as the foundation's accounts had consistently received clean audit reports and were subjected to oversight by the Companies Commission of Malaysia (SSM), the Higher Education Ministry, the Inland Revenue Board and the Auditor-General.
"Please tell us where our governance has failed. Every year we submit audited accounts. Every sen is accounted for. No trustee has ever taken a single sen from the foundation," he said.
TARC Education Foundation secretary Ong Whee Tiong said the foundation had always complied with statutory reporting requirements and had consistently submitted its audited accounts within the seven-month deadline prescribed under the Companies Act and Income Tax Act.
He questioned a new requirement for submissions within four months, saying even external auditors would struggle to complete the audit within such a timeframe.
"We have always complied with the law. These new requirements are simply not practical for an organisation of our size," he said.
Dr Wee also defended the foundation's structure, saying it differs fundamentally from privately owned universities.
He said TARC Education Foundation is a company limited by guarantee (CLBG) without shareholders, meaning no profits or dividends can be distributed to trustees or directors.
Instead, all surpluses are retained to expand campuses, improve facilities and maintain affordable tuition fees.
He said the university had recently invested more than RM200mil in student facilities and continued operating five branch campuses, including those that were not financially profitable, to ensure wider access to higher education.
He stressed that the foundation was not asking for additional financial assistance but merely for the Government to honour both the Prime Minister's public commitment and the long-standing tax treatment that had enabled TAR UMT to provide affordable higher education for decades.
"We are helping the Government educate more than 36,000 students at affordable fees and easing the burden on public universities.
"We are not asking for more money. We are simply asking the Government to restore what we have always enjoyed and allow us to continue serving future generations," he said.
Dr Wee said TARC Education Foundation would formally appeal to the Finance Ministry and continue seeking the Prime Minister's intervention, noting that the Finance Minister has the authority under the Income Tax Act to overturn the Inland Revenue Board's decision.
