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Lawyer: Shafee Could Be Scrutinised By Tax Authorities Over RM9.5 Million Under The Income Tax Act 1967

“If Shafee failed to do so, it may attract scrutiny under Section 113 (1) of the ITA for incorrect tax returns, or Section 114 (1) for tax evasion,” he said. If no tax return had been filed at all, he added, it would be an offence under Section 112 (1) which could see Shafee subject to enforcement under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Amla). Saravana said another question Shafee might have to address concerned his press statement claiming that the RM9.5 million was payment for the 46 election petitions he had handled for Barisan Nasional (BN) from 2004 to 2006, which was transferred to him in two tranches in 2013 and 2014. “Business income is taxed based on an accrual concept and not on a cash basis as provided for under Section 24 (1)(b) of the ITA. “This means Shafee should have brought the debt owed to him for the legal services rendered from 2004 to 2006 in the respective year of assessment when the service was rendered, not when he received the payment,” he said, adding that this was on the assumption that Shafee had in fact subjected the RM9.5 million to income tax. “Although the Inland Revenue Board (LHDN) gave concessions to lawyers in the past regarding their tax treatment on a cash basis, this concession ended some time ago,” he added. Unless Shafee had taken advantage of the concession and brought the debt owed to him to tax during the period under concession, or written off the debt as unrecoverable legal fees, Saravana said, he might have issues over whether he subjected the RM9.5 million in the correct year of assessment. If Shafee’s tax agents had failed to exercise reasonable care in managing his affairs, he added, they could also be found liable under Section 114 (1) of the ITA. On Sept 6, an officer in the Attorney-General’s Chambers released an affidavit alleging that two cheques worth RM9.5 million were issued by Najib to Shafee, who had led the prosecution team in Anwar Ibrahim’s 2015 appeal against his sodomy conviction. Siti Rahayu Mohd Mumazaini said the cheques were deposited into Shafee’s CIMB bank account on Sept 13, 2013 and Feb 17, 2014. She said the information was obtained by the Malaysian Anti-Corruption Commission after the issuance of an order obtained under Subsection 44 (1) of Amla to freeze Shafee’s CIMB bank account. Shafee later acknowledged receiving the money but said it was part of the fees owed to him for legal services provided for Umno and BN since the 1990s. Source : FMT

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