NKF: Tax-Exempt Status Stripped Not Because Of Funds Abuse

NKF says its non-compliance areas are in terms of procedural matters.

KUALA LUMPUR, Sept 11 – The Inland Revenue Board (IRB) has cancelled the National Kidney Foundation of Malaysia’s (NKF) tax-exempt status since last August 29.

The tax-exempt status revocation of NKF, which subsidises the cost of patients’ dialysis treatments for kidney failure, followed an audit conducted a few months ago.

NKF said during the audit, the tax authority discovered instances of non-compliance to Section 44(6) of the Income Tax Act 1967 that relates to the deduction of a person’s income in relation to their gifts to the government, local authority, or an institution or organisation.

The foundation said it has responded to the audit queries, with some explanations accepted while some were not.

The non-compliance areas are in terms of procedural matters and the accounting structure which did not indicate clearly the specific use of donated funds, especially for dialysis operations.

“NKF Malaysia wishes to clarify strongly that the audit did not show any abuse or misuse of funds,” NKF chairman Dr Zaki Morad said in a statement.

“Our external auditor, Deloitte Malaysia, similarly did not indicate any misuse of funds and all funds were used in pursuit of the objectives of the Foundation.”

IRB has advised NKF to immediately re-apply for a status and follow the guidelines established by them.

The foundation is currently seeking a tax consultant for advice on the application to ensure compliance with the guidelines.

In line with the revocation, NKF has asked donors who prefer the tax-exempt status to defer their donations until the status is reinstated.

Official receipts will be issued for all donations received until the tax-exempt status is reinstated.

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