Govt explains TARC’s interim 3-year tax exemption

The interim three-year exemption safeguards TARC’s tax-exempt position while it implements measures to fulfill the required conditions to gain the full 10-year exemption, said the Treasury. (TAR UMT pic)

PETALING JAYA: The finance ministry has sought to explain its decision to give Tunku Abdul Rahman University of Management and Technology (TAR UMT) an interim three-year income tax exemption instead of 10 years immediately.

The ministry said the 10-year exemption granted to TARC Education Foundation – the non-profit organisation that owns and operates TAR UMT – was subject to compliance with conditions set out under the Income Tax Act 1967.

Among others, it said, TARC needed to strengthen its governance and improve its management of donations.

“Taking into account TARC’s important role in the education sector, the government took the prudent approach of giving an interim three-year extension to the income tax exemption.

“This ensures TARC’s tax-exempt position remains while it implements measures to fulfill the required conditions. The finance ministry stands ready to facilitate TARC’s efforts.

“If all conditions are fulfilled, TARC will be eligible for the 10-year income tax exemption, as announced by the government,” it said in a statement.

The Treasury said the matter should not be politicised or manipulated as Putrajaya remained committed to supporting TARC, but tax exemption approvals must follow the legal conditions.

In February, Prime Minister Anwar Ibrahim announced that TAR UMT would receive a 10-year income tax exemption, in line with the policy of granting tax exemptions to all educational institutions and foundations for the next decade.

Without the exemption, the university could have faced up to RM20 million in annual taxes, potentially affecting thousands of students.

Yesterday, MCA president Wee Ka Siong claimed that the tax exemption period granted to TAR UMT had been reduced from the promised 10 years to three.