Taxman to relook RM2.6 billion donation to Najib

Taxman to relook RM2.6 billion donation to Najib
PHOTO: The Star/Asia News Network

KUALA LUMPUR - The Inland Revenue Board (IRB) will investigate the RM2.6bil (S$871 million) received by former prime minister Datuk Seri Najib Tun Razak, as well as cash and other valuable items recently seized from his residence and other premises.

IRB chief executive officer Datuk Seri Sabin Samitah said this follows ongoing investigations into all issues related to 1Malaysia Deve­lopment Bhd (1MDB).

“The tax treatment of the RM2.6bil that was initially decided on Feb 16, 2016, is now subject to further examination,” he said in a statement.

“In the process of ascertaining the true nature of the payment, the IRB will work closely with all agencies and newly formed task forces involved in the investigation.”

With regard to the seizure of cash and valuables, he said a notice under Income Tax Act 1967 would be issued to individuals connected to the items seized.

“The purpose of the notice is to ascertain whether sufficient disclosure of income has been made to the IRB that commensurate with the assets (cash and valuables) owned by a particular individual,” he said.

In the event of unexplained wealth, he said additional tax would be raised together with penalty of a maximum of double the amount of tax under-declared.

“Failure by a person to comply with the notice within the specified time is an offence and can be prosecuted under the Income Tax Act 1967,” he added.

Sabin said agencies previously tasked with investigating the RM2.6bil in 2016 found the amount received to be a donation payment, voluntary in nature and as such had no income characteristics.

Pursuant to the general principles of taxation with respect to such voluntary payment, he said it was not an income, which is subject to tax under the Income Tax Act 1967.

He added that 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 to sustain business operations.

“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.

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