KUALA LUMPUR: MK Land Holdings Bhd says that its subsidiary's additional taxes and penalties have been significantly reduced by over 85 per cent following a settlement with the tax authorities.
The settlement agreement with the Inland Revenue Board will reduce the taxes payable by Saujana Triangle Sdn Bhd from RM80.77 million to RM12.16 million, it said in the stock exchange filing on Thursday.
The property developer noted that the settlement was recorded by the Special Commissioners of Income Tax.
MK Land stated that the reduced amount will be paid progressively by December 15 of this year.
In 2017, Saujana Triangle received notices of assessment for additional income taxes totalling RM55.7 million for the years 2009 to 2011, coupled with a 45 per cent penalty of RM25.07 million for the year 2013.
MK Land contended that the Inland Revenue Board had misclassified gains from land sales in 2009 as revenue instead of capital.
The company also argued that the board had overlooked the five-year limitation for raising the assessments and had improperly disallowed certain development costs by treating them as mere provisions.
MK Land maintained that the land sales of its investment properties in 2009 should be regarded as capital transactions, subject to Real Property Gains Tax (RPGT) rather than income tax.
RPGT, a capital gains tax on property disposal gains, was suspended during the global financial crisis from 2007 until December 2009 and was reintroduced in 2010 at much lower rates.
MK Land concluded that the settlement agreement will not have a material impact on the company's financial position.