GST will make charity more expensive, say opposition lawmakers

Bukit Mertajam MP Steven Sim speaks about the impact of the Goods and Services Tax (GST) on charities in Kuala Lumpur today. – The Malaysian Insider pic by Kamal Ariffin, January 27, 2015.

Charities and non-profit organisations will no longer enjoy tax exemptions once the Goods and Services Tax (GST) kicks in, say opposition lawmakers.

Bukit Bendera MP Zairil Khir Johari and Bukit Mertajam MP Steven Sim in a joint statement today said while the economic impact of GST has been widely discussed, few have noticed its social consequences, especially its impact on charities and the non-profit sector.

They said that instead of being supported and encouraged by the government, the planned implementation of the universal consumption tax would create numerous obstacles and complexities.

Citing the Royal Malaysian Customs’ Goods and Services Tax: Guide on Societies and Similar Organizations booklet, Zairil and Sim said almost all activities carried out by charities, non-profit organisations and NGOs – including those currently enjoying tax-exempt status – would be subject to GST.

For example, on cash donations, the lawmakers said that under the GST regime only cash donations “without any benefits” to donors are not regarded as a taxable supply and hence would not be covered by GST.

However, cash donations are subject to GST if there are benefits to the donor, which are defined as: advertising or promoting the donor’s or sponsor’s name or its products in the programme booklet; naming the event after the donor or sponsor; and displaying the donor’s or sponsor’s name on shirts worn by a team.

"This raises many concerns as such practices are common in Malaysia, especially where corporate sponsors are concerned," they said.

- TMI