Philosophy Politics Economics

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IRB to act against KDSB? Posted: 14 Jul 2010 08:46 AM PDT IRB to act against KDSB over tax arrears By Clara Chooi July 14, 2010 KUALA LUMPUR, July 14 —The Finance Ministry announced today that the Inland Revenue Board (IRB) was taking "appropriate action according to the provisions in the law" against turnkey contractor Kuala Dimensi Sdn Bhd for failing to settle RM328.4 million in taxes. Deputy Finance Minister Datuk Dr Awang Adek Hussin told Parliament today that the IRB had no provisionary powers under the Income Tax Act 1967 to confiscate assets or cash from KDSB, the key contractor in the controversial Port Klang Free Zone (PKFZ) project. "However, the IRB is taking appropriate action according to the provisions in existing laws," he said in his response to an adjournment speech by Tony Pua (DAP-PJ Utara) this evening. In his speech, Pua questioned IRB's apparent lackadaisical and carefree attitude towards KDSB by allowing it owe such a high amount in backdated taxes over the past 13 years. "The IRB's attitude has led to a lack of public confidence towards the government. It looks as if the government is partial towards companies owned by influential tycoons. Meanwhile, the common man who works hard to support his family is punished quickly by the IRB to prevent him from evading taxes. "We hope that the IRB will take stern action quickly to collect these tax arrears from KDSB, including taking court action," he said. KDSB is owned by Bintulu MP and Barisan Nasional backbenchers club chairman Datuk Seri Tiong King Sing. Pua further questioned why the board had not exercised its powers under the Income Tax Act 1967 to collect the tax arrears before any appeal or dispute was made. "Why did the IRB not seek court intervention to confiscate the cash and assets of the KDSB, worth as much as RM932 billion, to settle the arrears?" asked Pua. He pointed out that KDSB should be bound by Section 103A(2) of the act, which stipulates that "tax payable under an assessment for a year of assessment shall be due and payable on the due date whether or not that company appeals against the assessment". "This means that whatever the assessment made by the IRB should be paid by the individual or the company although the said party plans to appeal or dispute the amount quoted," Pua asserted. He said that on July 23, the IRB had produced a letter to the Port Klang Authority, ordering it to stop payment to bondholders in the troubled PKFZ project. The IRB had then invoked the law to compel the PKA to act as a collecting agent and remit the RM328.4 million owed in outstanding taxes. "But after an appeal was made by the PKA following protests from the bondholders, the IRB had on June 30, retracted its orders to the PKA. "According to the KDSB chief executive officer Datuk Faisal Abdullah, the outstanding taxes in question came from came from accounts in the years 1997 and 1998. "The KDSB further disputed the amount quoted by the IRB," said Pua. In his response, Awang Adek explained that KDSB had submitted its tax returned for the years 1996 until 2006. "In the years 1996 and 1999, the KDSB was subjected to income tax, which it settled in full. For the other years, KDSB was not taxed as it reported high losses. "For the assessment year of 2000, which is the waiver year, however, KDSB reported unusually high profits and the IRB found there were discrepancies in the information it was furnished. Due to this, the IRB initiated an investigation on the firm on Nov 1, 2007," he said. He added that the investigation showed that KDSB had under-reported its revenue and made unlawful expense claims under the act. "However, the KDSB disputed our findings and failed to provide documents to prove its claims," he said. Awang Adek said that on June 18 this year, the IRB produced an additional assessment of taxes under Section 91 of the act, which amounted to RM328.4 million. "Since this issue was brought up in 2010, the issue of the tax arrears for the past 13 years does not arise," he said.

No To "Support Letters" Posted: 14 Jul 2010 08:21 AM PDT BN Backbenchers objection to eliminating the influence of "support letters" demonstrate the complete lack of political will to fight corruption and abuse of power The fight against corruption is touted as one of the Prime Minister Datuk Seri Najib Abdul Razak's 6 National Key Result Areas (NKRA) and Pemandu under the leadership of Datuk Idris Jala has been tasked to ensure its success. Hence under the "Government Transformation Programme" (GTP) produced by Pemandu, it has called for reducing the influence of "support letters" from politicians, and other influential figures on the civil service with the objective of "reducing leakages" from government procurement. This move has also the support of the Malaysia Anti-Corruption Commission. It says in the GTP document: ...Often, these interventions do not necessarily originate from politicians themselves, but from vested individuals who use the support letters as leverage to negotiate with the Government. ...Initially, we will issue a directive to the civil service that support letters and other associated forms of lobbying should not interfere with or circumvent our processes. The second phase will focus on issuing a directive to eliminate the practice of support letters. In addition, the Ministry of Finance (MOF) will follow up both directives with treasury circulars to all agencies and ministries to reject the content, and any associated recommendations and instructions, within support letters. Datuk Idris Jala repeated his objective at the Second Annual Corporate Governance Summit 2010 last week by insisting that, "the recommendation letters [well-known figures, such as ministers and members of parliament] should not put undue pressure to bypass the policy of procurement." But now, we have BN backbenchers, and even the very Minister in-charge of the Anti-Corruption NKRA, Datuk Seri Nazri Aziz challenging this very principle. A BN MP was quoted saying "How are the MPs going to help their constituents when they come about and ask for help, requests for getting into universities? Naturally they are frustrated and they want to help their constituents." Datuk Seri Nazri Aziz added "I'm in charge of the NKRA (National Key Results Areas) and I have gone through this. We have concluded that this is wrong... MACC and Idris are wrong (on this matter)," said Nazri. The law minister told The Malaysian Insider that the practice of MPs using recommendation letters to help expedite matters for their constituents was an "age old" practice and insisted that it needed to be retained. This is where it shows the complete lack of political will by Barisan Nasional to change, and to fight corruption, one of the biggest ills plaguing the country today. Datuk Idris Jala and Pemandu did not call for the elimination of letters of appeal in support of constituents who are possibly in need of help and assistance from the government. Very clearly, he was calling for the stop in the practice by BN MPs and leaders who issue "support letters" rampantly for politically connected contractors to secure lucrative contracts with the government, from the local, state and federal government. Such letters create leakages and wastages in our government expenditure as our civil servants are put in the uncomfortable position of having to "please" the big shot, despite it possibly not being in the best interest of the Government,. Such a practice also encourages corruption and political kickbacks for the politicians and Ministers who issue such letters as the letters are worth more than its weight in gold. We have even seen how such letters, such as the one written by the former Minister of Transport, Tan Sri Chan Kong Choy whose letters of support to Kuala Dimensi Sdn Bhd (KDSB), owned by Barisan Nasional backbenchers' chairman Datuk Seri Tiong King Sing resulted in the Government having to bear the burden of guaranteeing the RM3.6 billion of loans issued to KDSB. The DAP fully supports Pemandu's call for the letters of support to be eliminated and to quote Datuk Seri Idris Jala, "if the letter says 'please consider', then, it should be taken as 'please consider' and not as a must." In fact, we would like to go further in calling upon the government to immediately stop the practice of any letters of support for procurement contracts to demonstrate the Government's commitment to its war against corruption, failing which all the beautiful text written in the GTP are just purely rhetoric proving that the Barisan Nasional has no ability to change.

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