The notices were raised in relation to the disallowance of management fee expenses paid by the subsidiary to the gold-mining company
[SINGAPORE] A Malaysian unit of CNMC Goldmine has been slapped with additional income tax and penalty amounting to RM29.6 million (S$9.4 million) for the years of assessment 2019 to 2024. The Catalist-listed gold-mining company said on Friday (Dec 19) that it intends to file an appeal.
The notices of additional assessments were issued by the Inland Revenue Board of Malaysia (IRBM) to CMNM Mining, the company’s 81 per cent-owned subsidiary in Malaysia.
The total amount includes RM18.5 million worth of additional income tax, imposed at a rate of 24 per cent. The remaining RM11.1 million is a tax penalty charged at 60 per cent of the additional income tax.
These notices were raised in relation to the disallowance of management fee expenses paid by CMNM to CNMC, for services rendered by CNMC to support its subsidiary’s operations, said the company in a bourse filing.
CNMC noted that IRBM has taken the view that such management fees are not deductible under Section 33(1) of Malaysia’s Income Tax Act 1967, as the expenses were allegedly not within the regulation’s ambit. The company added that the authority had not provided a clear basis for this.
It pointed out that Section 33(1) provides that expenses incurred wholly and exclusively for the production of gross income is deductible.
The Malaysian subsidiary can lodge an appeal if it disagrees with the assessments.
“Based on the professional tax advice obtained, the group strongly disagrees with the aforesaid tax liability, and is of the view that it has a good basis in law to contend that the IRBM’s basis for issuing the said notices is erroneous,” said CNMC.
“The group has appointed its tax solicitors to file an appeal and challenge the notices, and will do so within the statutorily prescribed timeline.”
The notices are not expected to have a material adverse impact on the group’s going concern or operational viability, it added.
CNMC shares ended S$0.02 or 1.9 per cent higher at S$1.09 on Friday.
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