Court Restores Kidney Foundation S Tax Exempt Status

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The Shah Alam High Court today overturned the Inland Revenue Board’s (IRB) decision to revoke the National Kidney Foundation’s (NKF) tax-exempt status.
The foundation's counsel S Saravana Kumar confirmed the successful judicial review this afternoon.
"The court said IRB has no basis to revoke the tax exemption," the lawyer told Malaysiakini.
He added that judge Shahnaz Sulaiman ordered the quashing of the IRB letter dated June 17, 2020, that withdrew the foundation's tax-exemption status.
In 1970, the IRB granted the foundation tax exemption status under Section 44(6)(a) of the Income Tax Act (ITA) 1967.
However, after a tax audit in 2019, the IRB was alleged to have decided to revoke the tax exemption status and raise tax assessments in July 2020.
NKF filed a legal challenge on Sept 17 of that year, naming the IRB as the respondent.
According to a copy of the judicial review application, the foundation seeks a court order to quash IRB’s decision in the form of a letter dated June 17, 2020, that allegedly withdrew its tax-exempt status.
The applicant claimed the decision was illegal, void, unlawful and/or in excess of authority, irrational and/or unreasonable, among others.
NKF seeks a court declaration “that the respondent is not entitled in law to impose arbitrary and unilateral conditions on a charitable organisation such as the applicant when such conditions are not contained in the approval letter and/or communicated to the applicant”.
ITA provisions
According to a copy of an affidavit in support of the judicial review affirmed by the foundation’s chairperson Dr Zaki Morad Mohamad Zaher, the applicant contended that the IRB failed to appreciate ITA provisions that the income of an approved charitable organisation, received for charity purposes is exempted from tax, provided that the establishment is not operated primarily for profit.
The ITA provisions in question are Sections 44(6) read together with Paragraph 13 of Schedule 6 of the act.
NKF contended that IRB failed to take into account the established legal precedent of superior courts that approved charitable organisations are entitled to tax exemption as the principle of vested rights applies.
“It is not open to the respondent to arbitrarily and unilaterally impose conditions including a points system when the existence of such conditions was never communicated to the applicant and neither were such conditions prescribed by law,” the foundation claimed. - Mkini

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