New tax exemption terms for TARC ‘highly restrictive’, says Wee

 The MCA president says the terms limit the exemption mainly to public donations, while tuition fees, rental income and interest are excluded.

MCA president Wee Ka Siong said the TARC Education Foundation will appeal the finance ministry’s decision, claiming that the conditions undermine a non-profit university.

PETALING JAYA:

The TARC Education Foundation will appeal to the finance ministry over new conditions tied to a 10-year tax exemption for Tunku Abdul Rahman University of Management and Technology (TAR UMT), says its chairman, Wee Ka Siong, who described the conditions as “highly restrictive”.

Wee said the university expected a decade-long extension following Prime Minister Anwar Ibrahim’s earlier announcement, and believed the matter had been resolved.

However, he said he received a letter from the ministry dated June 18 that the exemption would only run from Jan 1 this year to Dec 31, 2028, after which the foundation would be taxable.

According to Wee, the new terms restricted the exemption mainly to public donations, while other key income sources such as tuition fees, rental income and interest would no longer qualify.

“I must emphasise that since its establishment, every ringgit received by TAR UMT, whether through public donations or students’ tuition fees, has been fully reinvested into the university’s development, operations and educational mission,” he said in a statement today.

“The tax restrictions now imposed not only contradict the original purpose for which the university was established, but also place an unjustified burden on a non-profit educational institution.”

A copy of the ministry’s letter, shared with the media, confirms the details of Wee’s account, including the three-year exemption period and its restriction to public donation funds.

The letter also instructs the foundation to create a separate fund and reapply to the Inland Revenue Board to continue its charitable activities, including scholarships, development and research funded by donations.

The finance ministry has said the shorter exemption was an interim measure while TARC works to meet the conditions, adding that the 10-year exemption remains the long-term goal.

Describing the terms as “ambiguous and unreasonable”, Wee said the board of trustees rejected the current conditions and will formally appeal to the ministry to restore the previous tax exemption framework.

The MCA president also pointed to past arrangements with the government, including the surrender of a special parliamentary instrument in 2012 and a government commitment to provide annual administrative grants of up to RM60 million.

“Yet, in its latest letter, the finance ministry has listed these government grants as one of the categories eligible for tax exemption. This is both puzzling and unnecessary,” he said.

“Under Malaysian law, government grants are not taxable in the first place. Including them as a ‘tax-exempt’ category serves no practical purpose whatsoever.” - FMT