RPGT Tax Planning Which Is Wrong Mistakes Everyone Makes

DIRECTOR GENERAL OF INLAND REVENUE vs KAYUSAR SDN BHD

Lesson from Tax Case:

Director General of Inland Revenue (DGIR) had the authority to charge the gain from disposal based on the market value if the taxpayer selling the property at equal to the purchase price to a connected person.

Background information

Kayusar Sdn Bhd is a reputable timber company.

The Company entered into a sale and purchase agreement by selling a condominium unit at RM398,000.00 which was equal to the purchase price.

Tax Issue:

Does transfer of ownership of property between connected persons stated under Para 23 Schedule 2 RPGTA required to be arm’s length price?

IRB opinion:

a) Section 25(2) of RPGT Act 1976 empowers DGIR to disregard and/or vary the transaction as the transaction has a direct effect on the chargeability of the tax.

b) DGIR charged the gain from the disposal of the condominium to the RPGT based on the market value determined by the Jabatan Penilaian dan Perkhidmatan Harta (JPPH).

The decision by The Court of Appeal

a) The Court of Appeal consistently found the Special Commission of Income Tax (SCIT) and High Court did not commit any error of law in their decision.

b) The responsibility was on the Company to prove that the market value determined by JPPH was inaccurate. However, the Company has failed to prove it.

c) The Company failed to discharge its obligation under its own name on 15 May 2014.

Therefore, the Company appeal is terminated with cost.

Source:

https://www.hasil.gov.my/media/rofh2uyb/20220427-revenews-kayusar.pdf

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