The concept of incomes of religious bodies has been misplaced.

The concept of incomes of religious bodies has been misplaced.

It is very interesting that the local press with the headlines namely “Sabah opposes tax amendment and Sabah opposes 'tax on praying' “ after an amendment by IRB on section 13(1)(b) Schedule 6 Income Tax Act 1967.

Reading from the press over the past two weeks since the amendment there appears to be some serious concern over such development.

What can IRB do according to the law even there is political intervention?

Why was there no objection in Parliament then prior to the said amendment?

What would the tax professionals say on such development after a few decades of such tax exemption in totality under any religious bodies?

I had written in Daily Express on 1^st January, 2017 on the said matter with clarity on the said development.

When IRB made such statement as “that the amendment to the 13(1)(b) Schedule 6 Income Tax Act 1967 (Act 53) in Budget 2017 was to provide clarity of the law on the application of exemption to religious institution or organisation.”, it is exactly what it is as far as  IRB is concerned on business incomes and  rental under the religious bodies.  If not so, why made such recent amendment to pursue the duty of IRB to pave the way for taxation interpretation of certain incomes under Act 53.

The modus operandi of IRB has been known that when the IRB fails to apply any of its law or regulations for whatever reasons especially losing cases before the Special Commissioners and the Civil Courts.  IRB would resort to changing or amending the laws and the regulations.

So it is likely what is happening now.  Isn’t futile to apply political pressure be it good or otherwise that even the Chief Minister of Sabah raised objection?  Some people says Parliament is supreme and no amount of political intervention no matter how noble be it that IRB should depart from such laws.

Unless IRB decides to give concessions to such development, I would like to inform all the religious bodies especially the non Muslim bodies to be prepared to face the new procedure of IRB by preparing the proper accounts and properly audited in good time to submit their returns to the IRB in 2017 to avoid default consequences.

Definition of business and rental can be re-defined in the context of religious bodies and it is important how we use such terms in their accounts as such bodies are not in business to make profit but in worship and prayers.  Reclassifying such items may justify no taxes to be applied in line with the concept of donation.

Also some big and old religious bodies with many branches in various towns in Sabah have set up a central body to provide administrative prerogative over such state-wide affairs and beyond.  Such central system can present some problems with the latest legal amendment as far as IRB is concerned.

Joshua Y C Kong 10 January, 2017