When questioned by LHAG partner Rosli Dahlan, Nik Nazmi who was a guest panellist at the recent LHAG Tax, SST and Customs seminar, agreed on the need to repeal Section 127 (3A) of the Income Tax Act 1967.

The section, which empowers the finance minister to grant tax exemptions without the need to gazette or explain the need for them, was earlier highlighted by LHAG tax partners DP Naban and S Saravana Kumar who said it lacked transparency and allowed for abuse by the minister.

Nik Nazmi also gave the assurance that he would raise the issue of reforming the tax appeal process in Malaysia.

He agreed with Rosli that it did not make sense for Malaysia to continue maintaining the Special Commissioners of Income Tax (SCIT) when the UK had replaced it with the First Tier Tax Tribunal.

The SCIT system, introduced in Malaysia in 1967, was modelled after a similar concept which was practised in the UK at the time.

Nik Nazmi also touched on the SCIT appointment system where all appointees are currently nominated by the finance minister to the Yang di-Pertuan Agong.

He agreed with the concerns raised by the LHAG tax partners that such practices had created the perception that the SCIT may not be independent. This is as both the SCIT and the Inland Revenue Board (LHDN), whose decisions are being challenged before the SCIT, are agencies under the finance minister.

He promised to raise the matter in Parliament with the view of having a more modern and independent tax appeal system, given that there are about 900 tax appeals pending before the SCIT with hearing dates fixed for as far as 2021.

The LHAG tax seminar, which was attended by over 750 clients, was closed by LHDN director-general Sabin Samitah who represented the finance minister.