KUALA LUMPUR (Aug 9): The legal provision that allows the finance minister to exempt companies or individuals from paying tax at his discretion should be repealed, a tax lawyer said today.

S Sarvana Kumar, a partner in Lee Hishammuddin Allen & Gledhill, said Section 127 (3A) of the Income Tax Act 1967 must be removed to avoid issues of abuses of the tax law.

Speaking to reporters on the sidelines of a tax seminar, Sarvana said Sections 127(3) and 127 (3A) both allow the finance minister to give tax exemptions.

He said Section 127(3) could be maintained because tax exemption under this provision is only granted through a gazette order that has to be tabled in the Parliament.

“So in that way, when someone gets tax exemption, the Parliament and the whole world will know — because it’s gazetted.

“However under 127(3A), it is not required to be tabled before the Dewan Rakyat. There is no gazette. It is done in a not-so-transparent fashion, so we won’t know why a person is granted an exemption.

“I am sure there may be good reasons, but the rakyat has a right to know why an exemption was given, as tax is a public matter,” he added.

PKR’s Setiawangsa parliamentarian Nik Nazmi Nik Ahmad, who was a guest panellist at the event, said he will bring the matter up in Parliament in due course.

“I think the fact that this section allows for exemptions to be granted by [the] minister for companies [and individuals] not to pay tax, and is not tabled by parliament, is very problematic.

“This is because there is no transparency and no accountability on who or which company gets this exemptions. The minister is given full discretion to that, and it is open to abuse.

“I think this section should be removed [from the ITA1967], in order for it to be fair and avoid abuse,” he told reporters.

The half day seminar was closed by the director-general of the Inland Revenue Board, Datuk Seri Sabin Samitah, who attended the event as a representative of both the IRB and on behalf of Finance Minister Lim Guan Eng.