Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on June 8, 2018

KUALA LUMPUR: The Inland Revenue Board (IRB) will re-examine the tax treatment of the money deposited into former prime minister Datuk Seri Najib Razak’s personal account in 2013, which was claimed as a personal donation from the Saudi royal family.

“In light of the disclosure by the current chief commissioner (Datuk Seri Mohd Shukri Abdull) of the Malaysian Anti-Corruption Commission (MACC) and ongoing investigations pertaining to all issues related to 1Malaysia Development Bhd (1MDB), the tax treatment of the said RM2.6 billion payment that was decided on Feb 16, 2016 is now subject to further examination,” said IRB chief executive officer Datuk Seri Sabin Samitah in a statement yesterday.

He said the IRB will work closely with all agencies and the newly formed task forces that are involved in the 1MDB-related investigations, to ascertain the true nature of the payment. “On Feb 16, 2016, based on the findings made by the agencies that had been given the task to investigate the said RM2.6 billion, the amount received was found to be a donation payment and voluntary in nature and as such had no income characteristics,” said Sabin.

Therefore, it was not an income which was subject to tax under the Income Tax Act 1967.

However, Sabin said a voluntary payment may change in character and be subject to tax if it is given repetitiously, as consideration for services rendered, in return for any benefit of any kind or the amount is used in a business activity in order to sustain business operations. “On this point it should be highlighted that voluntary payments received by charitable institutions which have these characteristics are subject to tax unless the institution is exempted under the Income Tax Act 1967,” he said.

Former attorney-general Tan Sri Mohamed Apandi Ali on Jan 26, 2016 cleared Najib of any wrongdoing in relation to investigations into the RM2.6 billion alleged to have been deposited into his personal bank account. In March that same year, then minister in the prime minister’s department Datuk Seri Azalina Othman Said was reported as saying that the MACC had confirmed that the RM2.6 billion in Najib’s account was a private contribution from the Saudi royals.

Sabin said the IRB will also reexamine the tax treatment of the cash and other valuable items recently seized from Najib’s residence and other premises. “The purpose of the notice is to ascertain whether sufficient disclosure of income has been made to [the] IRB that commensurates with the assets [cash and valuables] owned by a particular individual,” he said.

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