The Finance Ministry clarified that the amendment to the Income Tax Act 1967 was not to impose religious bodies to pay tax, but rather to ensure their income were specifically used for religious and charitable purposes.
Deputy Finance Minister Othman Aziz stressed the amendment applied to all religious bodies, Muslim and non-Muslim bodies, in order to qualify for tax exemption starting with this year’s assessment.
“Tax exemption (on religious bodies) is a way for us to ensure income, such as from donations, is used for charitable, preaching and worship activities.
“This is to avoid misuse by certain quarters to solicit donation for other purposes under the mask of a religious body,” he told reporters when met after a briefing on the 2017 Budget here.
The amendment to the act that had most religious bodies confused, especially non-Muslim organisations, involved paragraph 13(1)(b) of Schedule 6 of the act, which specifies tax exemption only applied to contributions received by non-profit religious organisations and religious institutions solely used for charitable purposes.
Othman noted the amendment on the act could address concerns over militant activities funded by donations.
He also said there were certain individuals earning more than RM10,000 a month who did not declare their income citing that they worked with a religious body that was exempted from paying tax. – Bernama