KUALA LUMPUR, Dec 28 ― Sarawak’s religious organisations urge the federal government to review a newly-passed law that will effectively force them to pay income tax, saying such a move defeats their services to society.
Association of Churches Sarawak chairman Rev Datuk Dr Justin Wan said imposing income tax would not be conducive as religious organisations are not operating as business entities, local paper The Borneo Post reported today.
“Since we receive funding from the government, then why is the government taxing us back when they should be giving us more funding to assist us?
“The churches have contributed a lot to the society. If we are going to be taxed, it will defeat the vision and mission to help the society and government at large,” he was quoted as saying.
He also said churches might need to cut down their activities and programmes to help the society if they are being taxed.
“Even if it [the Bill] has been passed, we are still appealing to the government who had introduced the tax to relook into the possibility of how to help the religious bodies and not burden religious bodies. Tax will definitely burden us,” he was quoted adding.
Parliament recently passed an amendment to paragraph 13(1)(b) of the Income Tax Act's Schedule 6, which limits the tax exemption for income received by non-profit religious organisations and religious institutions.
The change to paragraph 13(1)(b) of Schedule 6 of the Income Tax Act added on the requirement that the “contributions” received by religious bodies be meant solely for “charitable purposes” in order to qualify for tax exemption.
Also weighing in on the tax move was Sarawak Sikh Temple Association president Dr Kalwinder Singh Khaira who told The Borneo Post that his group does not get a fixed grant from the government, making their income vary from year to year.
“Taxation will have effect on our income and consequently the activities of our temple,” he was quoted saying.
He added that all incomes derived by the Sikh temple were used for religious purposes and for the development of the Sikh community.
Other Malaysian churches and Muslim organisations have yesterday raised concern on the impact of the tax on their activities, adding that the amendment was made without their consultation and lacked clarity on the definition of “contributions”.
However, Second Finance Minister Datuk Johari Abdul Ghani told Malay Mail Online when contacted yesterday that the amendment was intended to safeguard public donations by plugging a legal loophole as “many” religious bodies are actively involved in investments and property transactions that earn them huge profits.
He asserted that donations to religious bodies will still be exempted from tax after the amendment.
