Clarify new tax on religious organisations, churches tell Putrajaya

Dusing said local churches were not consulted by the government before the amendment was tabled and passed in Parliament recently. — Reuters pic

Dusing said local churches were not consulted by the government before the amendment was tabled and passed in Parliament recently. — Reuters pic

KUALA LUMPUR, Dec 27 — Churches nationwide have been caught unawares by a change in the law that may see religious bodies being taxed and are now requesting the government for clarification.

Sabah Council of Churches president Rev Datuk Jerry Dusing said local churches were not consulted by the government before the amendment was tabled and passed in Parliament recently.

“It’s a surprise to me. I represent Sabah Council of Churches, so at the very least I could be consulted. I also sit in NECF and CFM, these two bodies were not consulted at all,” he told Malay Mail Online when contacted yesterday.

CFM stands for the Christian Federation of Malaysia, the umbrella body for churches nationwide, comprising three component members: the Catholic Bishops Conference, the Council of Churches of Malaysia (CCM) whose members are largely of the Protestant denomination and the National Evangelical Christian Fellowship (NECF).

In a statement Sunday expressing its concern over various matters, the Sabah Council of Churches urged the government to resolve the uncertainty arising from the amendment.

“The recent amendment to the Income Tax Act 1967 that seeks to tax donations for non-Muslim religious bodies has caused lots of confusion.

“We urge the Prime Minister to explain the rationale behind the amendment, define clearly the intended targeted bodies and clarify why it involves only ‘non-Muslim’ religious bodies,” the statement by Dusing said.

Rev Eu Hong Seng, who is the current chair of CFM and NECF, confirmed that both bodies and Malaysian churches were not consulted ahead of the amendment.

“No, we were not consulted on it.

“But having said that, in January, we hope to meet with the Ministry of Finance on this issue,” he told Malay Mail Online when contacted.

Noting that non-Muslim bodies will “definitely” be affected by the law change, Eu also said that churches from CFM will be “seeking clarification” on the effect of the amendment.

Rev Dr Hermen Shastri, general secretary of CCM, noted that religious people driven by their deeply-held religious convictions would do things both for the religious community and as outreach in service to others, adding that donations made go to such causes.

“Since the founding of our nation, the government has recognised this spiritual role of religions and have exempted them from tax from the income derived,” he told Malay Mail Online when contacted.

“So if there is need to revisit this matter on the part of the government in regard to recent amendments made in Parliament, the first duty is to dialogue with how religious groups conduct their religious work and how they find the funding for it.

“Second, the government must ensure that all religions are on a level playing field with regard to what is taxable and what is not. One religion cannot be privileged among the rest,” he added.

He highlighted that Islamic banking was exempted from the Goods and Services Tax.

“Are we to expect the same with the current amendments and its implications on the work of religious communities in the country? We will see after the dialogues which should be forthcoming from the government side to hear our views,” he said.

The Income Tax Act’s Schedule 6, which lists down income which is exempt from tax, includes under paragraph 13(1)(b) “a religious institution or organisation which is not operated or conducted primarily for profit and which is established in Malaysia exclusively for the purposes of religious worship or the advancement of religion”.

However, in the Finance Bill 2016 that was passed in the Dewan Rakyat on November 23 and by the Dewan Negara on December 15, an additional requirement that the income be meant for “charitable purposes” was introduced.

This was done through a clause in the Bill to replace the original line with “a religious institution or organisation in respect of any contribution received for charitable purposes in the basis year for a year of assessment provided such institution or organisation is not operated or conducted primarily for profit and is established in Malaysia exclusively for the purpose of religious worship or the advancement of religion”.

The explanatory note for the Bill says this amendment to the tax exemption requirement will take effect from the year of assessment 2017 and onwards.

Last week, local paper The Borneo Post reported that mosques and Muslim welfare bodies in Sarawak would purportedly not be affected by the amendment as they fall under state Islamic law, the Majlis Islam Sarawak Ordinance 1984. – Malay Mail Online

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