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Author: savemalaysia   |   Latest post: Sat, 21 Sep 2019, 7:14 AM


Tax authorities planning to prevent fraud by charitable organisations

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KUALA LUMPUR: Malaysia’s tax authorities are looking at ways to ensure that the issuance of tax-exempt receipts by charitable organisations is not abused.

Deloitte Malaysia head of financial services, Chee Pei Pei, said this was because some organisations which do not have the necessary approvals have been found to be issuing false tax-exempt receipts to its donors.

“Some organisations have been found to be issuing false receipts which display an official serial number to indicate that it holds tax-exemption status.

“The authorities are looking at how they can ensure that there is no misuse of funds by these organisations,” she said after a panel discussion at a conference on the future of Asian charitable giving.

Charitable organisations are required to apply for the tax-exemption status from the Inland Revenue Board (IRB), under Subsection 44(6) of the Income Tax Act 1967 to be able to issue the receipts.

The approval process by the IRB takes a minimum of three to six months, given that the organisation has all the necessary documents and meets all the requirements.

Companies or individuals who donate cash to these organisations, which have attained the approval, are then eligible for corporate or individual tax deductions.

There are currently about 2,000 charitable organisations in Malaysia which have been granted the tax-exempt status.

Chee told StarBiz that the tax authorities were considering several options, including simplifying the checking process for donors.

This, she said, could include enabling the public to check the charitable organisation’s tax-exemption status online. She noted that various measures had been taken over the years to prevent the abuse of public funds donated to charities.

She said there were also tight controls in place, which allowed the authorities to withdraw the exemption status in the event the organisation was found to be involved in activities that were against its charitable objectives.

“For example, the tax-exempt status granted to charitable organisations used to be perpetual.

“However, since 2016, the organisations are required to get the status renewed once every five years, subject to an audit by the authorities,” she said on the sidelines of the “Creating a sustainable future for Asian charitable giving” conference here.

The conference was organised by Step Malaysia and Step Philanthropy Advisors SIG, and supported by the Labuan International Business and Financial Centre.

Read more at https://www.thestar.com.my/business/business-news/2019/05/09/tax-authorities-planning-to-prevent-fraud-by-charitable-organisations/ 


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