KUALA LUMPUR: Parents can rest assured that Universiti Tunku Abdul Rahman (UTAR) will continue to provide quality and affordable education despite the ongoing tax controversy, says Datuk Seri Dr Wee Ka Siong.

Encouraging continued enrolment, the MCA president reaffirmed UTAR’s commitment to maintaining its affordable tuition fees.

Dr Wee said that while private universities charged up to RM600,000 for a medical degree, UTAR offered it for just RM280,000.

“There is no need to worry, we will retain this advantage. We are managing this issue (tax dispute).

Over its 22-year history, UTAR has produced approximately 87,000 graduates, offering affordable education made possible through public donations and tax exemptions,” he told a press conference at Wisma MCA yesterday.

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

This followed a move by LHDN to impose outstanding taxes and penalties amounting to RM83mil on UTAR, which is a non-profit body.

Lim said LHDN maintained that UTAR Education Foundation and UTAR were treated as two different entities for tax purposes.

Accordingly, she said, LHDN contended that income generated by UTAR Education Foundation continued to enjoy tax-exempt status, and that income generated by UTAR did not.

To this, Dr Wee, a UTAR university council member, described UTAR Education Foundation and UTAR as intertwined, “similar to conjoined twins”.

“Thus, we cannot concur with the authorities’ view of them being separate entities. For over two decades, UTAR Education Foundation and UTAR have complied with all legal requirements, consistently submitting asset reports and successfully passing audits.

“In 2023, LHDN audited UTAR Education Foundation and found everything in order. So why are we suddenly facing tax demands and penalties now?” he asked.

Dr Wee pointed out that UTAR was set up on June 10, 2002, as a non-profit organisation under the Private Higher Educational Institutions Act 1996 (Act 555).

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

He said the revised income tax guidelines in 2019 by LHDN should not impact UTAR’s tax-exempt status unless amendments to Act 555 were made in Parliament.

“UTAR and UTAR Education Foundation have always complied with LHDN’s requirements, submitting all necessary documents.

“Why were there no issues before? Now there are demands for taxes and penalties,” he said.

Dr Wee explained that UTAR was not looking for a confrontation with LHDN and was only seeking fair treatment for the university, which, he said, was a significant contributor to the country’s private education sector.

Emphasising the importance of resolving the issue promptly, Dr Wee said only Prime Minister Datuk Seri Anwar Ibrahim, as Finance Minister, had the authority to annul or overturn the tax penalties imposed by the LHDN.

He said UTAR initially followed the standard procedure to appeal to LHDN on the RM83mil in outstanding taxes and penalties slapped on the university in June, but this was unsuccessful.

Following this, Dr Wee said, he met with Anwar in June and again in July to explain the setting of UTAR under Act 555 and the element of tax exemption.

“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, he said UTAR was compelled to appeal to the Finance Ministry for the cancellation of the tax bill, which required the approval of the minister.

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

Dr Wee said that due to ongoing negotiations with the ministry, the original one-month deadline to settle the tax bill was 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.

https://www.thestar.com.my/news/nation/2024/10/06/wee-utar-to-stay-affordable