Friday, October 21, 2011

Income Tax Act amendment may put off investors

KUALA LUMPUR (Oct 21, 2011): A little-known, new amendment to the Income Tax Act may drive off foreign investment, and negatively impact the local business community and taxpayers in the country, the MCA Young Professionals Bureau today said.

Its chairman Datuk Chua Tee Yong said the amendment to Section 81 of the Act gives absolute power to the director-general (DG) of the Internal Revenue Board to disregard, wholly or partially, proof of income tax claims after the notice period has ended.

"Previously, a person is entitled to appeal any additional assessment issued by the DG. "However, this new amendment does not allow for any room to appeal, as the DG may disregard proof of claims, such as receipts or documents," he said in a press conference here.

Chua used an example to illustrate the new amendment: a public listed company makes a claim for travelling expenses incurred four years ago, amounting to RM500,000. The DG may issue a notice to the company to present receipts for this claim within 30 days.

However, due to difficulties in obtaining the receipts, the company is unable to present the receipts and pays the additional assesment.

But if company finds and presents the receipts after the deadline has passed, the company cannot appeal against this additional assessment because the DG may choose to disregard the receipts entirely.

This amendment will create apprehension among investors and businesses, stressed Chua.

"While it is important for the government to plug leakages or prevent false claims by putting this new amendment in place, it is only fair and reasonable to allow for room to appeal," he said, adding that the business community will surely view this amendment negatively.

Chua said the issue will be brought up to the MCA presidential council next Tuesday so that it can be brought to the Cabinet and the National Economic Council for deliberation.

"Any new act or amendment must present clear guidelines on how to appeal or have avenues for dispute," said Chua.

(Source: The Sun)

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