See Chee How said this would help such organisations avoid being subject to any tax under the recent amendment to the Income Tax Act, the Borneo Post reported.
“Even though the federal government has the legislative authority to levy taxes, the taxes over which Sarawak wields legislative power were assigned to the state, in the same way as revenues of local councils, proceeds from sales and rental of state land and properties, and income from licences issued by the state under its legislative power over lands, mines and forests.
“Since the tax incomes are assigned to Sarawak, the state government should have the say to exempt taxes on incomes of those religious charities, charitable trusts and institutions incorporated and operating in Sarawak,” he was quoted as saying by the Sarawak-based daily yesterday.
See, who is state PKR vice-chairman, urged the state government to support the local religious bodies that could be “unreasonably tormented by the federal government to pay taxes on their incomes”.
Referring to previous reports where various religious bodies spoke of their contribution to the state and society, See said these sometimes go beyond the “religious activities” scope under which Putrajaya says is the only criteria for tax exemption.
“Religious worship and the advancement of religion has been an integral part of our amiable Sarawakian society. Through the good works of all the different religious bodies and institutions, they have contributed enormously towards Sarawak’s nation-building particularly the peaceful and harmonious co-existence of our populace.
“To levy taxes on their incomes will impede their efforts for the advancement of religion and religious worship in the state and thereby cause detriment to our society,” See told Borneo Post, adding that the government should be supporting and funding these organisations instead of levying taxes on their incomes.
He also asked the Inland Revenue Board (IRB) to provide evidence of alleged profit-making investments under the various religious bodies, charities, charitable trusts and institutions.
See was responding following an announcement by the IRB on Tuesday, confirming that religious institutions or organisations need to pay tax for their incomes derived from businesses or rental.
“The amendment to paragraph 13(1)(b) of Schedule 6, Act 53 explicitly provides that religious institutions or organisations automatically qualify for the exemption on income from donations contributed by religious worshippers solely for the purpose of religious worship activities or the advancement of religion. This exemption is applicable to all religious institutions or organisations,” the IRB statement stated.
The IRB also specified that the “income from business or rental are income taxable under Act 53 and are outside the scope of income which is exempted under Schedule 6. The taxable income is income after deducting all expenses incurred in the production of said business or rental home. This treatment is consistent with the principles under Act 53.”
IRB justified that the amendment to paragraph 13(1)(b) of Schedule 6 Income Tax Act 1967 (Act 53) in Budget 2017 seeks to provide clarity of the law on the application of exemption to religious institutions or organisations.
“Prior to this amendment, there has been some confusion among taxpayers as to whether or not religious institutions or organisations automatically qualify for the exemption under 13(1)(b) Schedule 6 or are required to obtain approval from the director-general of Inland Revenue under Section 44(6) Act 53.”
Meanwhile, according to Borneo Post, Sarawak Deputy Chief Minister Amar Douglas Uggah Embas declined to comment on the matter saying he was still awaiting clarification from IRB.
“I have just discussed with the IRB officer to get her feedback. I am waiting for her detailed explanation,” Uggah said.