Dr Wee urges PM to intervene in UTAR tax dispute issue

KUALA LUMPUR: Datuk Seri Dr Wee Ka Siong has called on Prime Minister Datuk Seri Anwar Ibrahim to urgently address the ongoing tax dispute involving Universiti Tunku Abdul Rahman (UTAR).

The MCA president pointed out that only the Prime Minister, who also holds the role of Finance Minister, has the authority to annul or overturn the tax penalties imposed by the Inland Revenue Board (LHDN).

Since receiving LHDN’s notice in June, Dr Wee has met Anwar twice – in June and July.

Dr Wee explained that UTAR initially followed the standard procedure to appeal to the LHDN.

However, their appeal was unsuccessful, as LHDN maintained its stance that UTAR must pay the RM83mil tax bill.

“During my second meeting with the Prime Minister, he reviewed the LHDN report, and we realised that the appropriate course of action was to file an appeal with the Finance Ministry,” he said.

Faced with limited options, UTAR was compelled to appeal to the Finance Ministry for the cancellation of the tax bill, which requires the approval of the Finance Minister.

ALSO READ: Discussions ongoing over UTAR tax dispute with LHDN, says Dr Wee

“Over the past few months, we have engaged in several discussions with both LHDN and the Finance Ministry. The Ministry has informed us that they need time to prepare a comprehensive report,” he added.

Dr Wee also disclosed that, due to ongoing negotiations with the Finance Ministry, the original deadline to settle the tax bill within one month had been extended to Sept 30.

“I am confident that the Prime Minister, with his understanding of UTAR’s establishment, will resolve this issue wisely,” he added.

He reiterated that the UTAR Education Foundation and UTAR should be considered a single entity.

“For over two decades, the foundation and UTAR have complied with all legal requirements, consistently submitting asset reports and successfully passing audits.

”In 2023, the LHDN audited the UTAR Education Foundation and found everything in order. So why are we suddenly facing tax demands and penalties now?” said Dr Wee during the press conference held at Wisma MCA on Saturday (Oct 5).

Dr Wee, who is also UTAR university council member, explained that UTAR, launched on June 10, 2002, was established under the Private Higher Educational Institutions Act 1996 (Act 555) as a non-profit organisation.

“The university was set up as a company limited by guarantee (CLBG), essentially a foundation like a Sendirian Berhad but non-profit,” he said, questioning the rationale behind treating UTAR as a separate entity from its foundation.

ALSO READ: UTAR is tax exempted, says Wee

Due to the changed income tax guidelines in 2019 by LHDN, he stated that this should not impact UTAR’s tax-exempt status unless amendments to Act 555 are made in Parliament.

“UTAR and the UTAR Education Foundation have always complied with LHDN’s requirements, submitting all necessary documents. Why were there no issues before, but now there are demands for taxes and penalties?” he questioned.

Dr Wee said that UTAR does not intend to engage in a confrontation with LHDN but seeks fair treatment for UTAR, a significant contributor to Malaysia’s private education sector.

“Over its 22-year history, UTAR has produced approximately 87,000 graduates, providing affordable education made possible by public donations and tax exemptions. For instance, while private universities may charge RM600,000 for a medical degree, UTAR offers it for RM280,000,” he cited as an example.

Dr Wee also reassured parents, encouraging them to continue sending their children to UTAR for higher education, stating, “There’s no need to worry.”

Deputy Finance Minister Lim Hui Ying said the LHDN stated that UTAR has never been granted any tax-exempt status, unlike UTAR Education Foundation, which was granted such an exemption under Section 44(6) of the Income Tax 1967 on July 1, 2003.

“LHDN maintains that UTAR Education Foundation and UTAR are treated as two different entities for tax purposes.

“Accordingly, LHDN contends that income generated by UTAR Education Foundation continues to enjoy tax-exempt status, whereas income generated by UTAR does not,” she said in a statement on Friday (Oct 5).