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Saturday, December 15, 2012

Japan's war planes F-15 fighter jets against a Chinese suveilance plane over Diaoyu Islands


This handout picture taken by the Japan Coast Guard on Thursday shows a Chinese government plane flying near the Diaoyu Islands in the East China Sea. Japan scrambled fighter jets after the Chinese plane entered airspace over the islands at the center of a dispute between Tokyo and Beijing. Photo: AFP

China's Ministry of Foreign Affairs said Thursday that it is "normal" for a Chinese marine surveillance plane to patrol the airspace over the Diaoyu Islands in the East China Sea, prompting Japan to scramble fighter jets to the area.



According to a statement on the website of the State Oceanic Administration (SOA), China's Haijian B-3837 aircraft reached the airspace over the Diaoyu Islands at 10 am Thursday, joining the flotilla of marine surveillance ships Haijian-50, Haijian-46, Haijian-66 and Haijian-137 to patrol the area.

The SOA said that during the patrol, the flotilla stated the Chinese government's position on the islets to the Japanese vessels, demanding they leave the area. On its website, it also posted two photos of the islands shot from the airplane.

The aircraft is a twin-engine propeller plane used for surveillance or monitoring of fishing activities.

The incident prompted Japan's military to scramble eight F-15 fighter jets, Japan's Defense Ministry said. Japanese officials later said the Chinese aircraft had left the area, Reuters reported.

The Japanese Defense Ministry said it was the first time that a Chinese plane had entered "Japanese airspace" since Japan started recording similar incidents in 1958, Kyodo News reported. Japan later protested to China over the incident.

China's foreign ministry spokesman Hong Lei told a regular press briefing Thursday that it's normal for China's marine surveillance planes to fly in the airspace over the Diaoyu Islands, as Diaoyu Island and its affiliated islets are China's inherent territory.

"China demands Japan stop its illegal activities in the waters and airspace of the Diaoyu Islands," Hong stated.

Han Zhiqiang, charge d'affaires at the Chinese embassy in Tokyo, said China hadn't accepted the Japanese side's diplomatic representation over the incident, the China News Service reported.

Liu Jiangyong, a vice dean of the Institute of Modern International Relations at Tsinghua University, told the Global Times that after the US handed Okinawa over to Japan in 1972, Tokyo brought the Diaoyu Islands into its Air Defense Identification Zone (ADIZ).

"Sending a plane to the area was a breakthrough in terms of challenging Japan's ADIZ, which was arbitrarily drawn up by Tokyo a long time ago," said Liu, noting that the struggle over the Diaoyu Islands would enter a new phase following China's success in carrying out routine patrols in the waters of the islets.

Liu also highlighted the increasing risk in terms of conflicts brought about by air confrontations.

Related post:

75th anniversary of Nanjing massacre

Friday, December 14, 2012

75th anniversary of Nanjing massacre

History of Nanjing Massacre





December the 13th marks the 75th anniversary of the Nanjing Massacre. A series of official memorials have been held in the eastern China city to commemorate the estimated 300 thousand Chinese killed by Japanese troops during World War Two.

An unforgettable part of history for Chinese people.

Sirens wailed in the chilling morning... Nanjing was in grief as people from across the city, and the world, gathered here to mourn the estimated 300,000 lives taken by Japanese troops 75 years ago.

During World War Two, the Japanese army invaded almost half of China, causing tens of millions of casualties and devestating cities and towns. The then Chinese capital, Nanjing, suffered six weeks of murder and rape.

Every year, the siren rings here in front of the memorial museum, reminding the city of the nightmare in 1937.
On December 9th that year, after securing control of Shanghai, Japanese troops launched a massive attack upon Nanjing. Four days later, the city fell.

In the following six weeks, the Japanese forces engaged in an orgy of murder, rape, looting and arson that came to be known as the Nanjing Massacre.

Chinese and Western eyewitness accounts have documented the crimes. On December 19th, Reverend James McCallum wrote in his diary:

"I know not where to end. Never I have heard or read such brutality. Rape! Rape! Rape! We estimate at least one thousand cases a night, and many by day. In case of resistance or anything that seems like disapproval, there is a bayonet stab or a bullet. People are hysterical... The whole Japanese army seems to be free to go and come as it pleases, and to do whatever it pleases."

The International Military Tribunal of the Far East, also known as the Tokyo Trials, estimated more than 200-thousand people had died in the Nanjing Massacre. Most experts put that number at about 300-thousand.

Japanese newspaper covered one of the most notorious atrocities... a killing contest between two Japanese officers. Toshiaki Mukai and Tsuyoshi Noda competed to be the first to kill 100 people with a sword.

Although today the Japanese government has admitted to the killings, some Japanese nationalist groups deny these events ever took place.

There are misunderstandings of this history, we want to tell the world the right facts. He says.

Many Japanese prime ministers have visited the Yasukuni Shrine, a shrine for Japanese soldiers who died during World War 2. These include the criminals of the Nanjing Massacre. To this day, the tragedy of Nanjing continues to be a stumbling block in Japan’s relations with other Asian nations.


The memorial was held at a square in front of the memorial hall for the Chinese victims massacred by Japanese soldiers. The crowd mourned the dead and presented wreaths.

A citizen representative read the Nanjing Peace Declaration.

Citizen representative, Nanjing city, said,"Peace rather than war, development rather than poverty, cooperation rather than confrontation is the eternal theme of human civilization and progress."

The mourners included local school children, college students, survivors of the massacre and international friends.

The Nanjing Massacre Memorial Hall is an important reminder of the past and a place to mourn the dead.

By recalling the past, the memorial also conveys Chinese people’s wishes for peace with all nations in the world.

Related post:
Philippines wants rearmed Japan to contain China
Japan ministers visit Tokyo war shrine amid anger from China, S. Korea.19 Oct 2012

News for 75th anniversary of Nanjing massacre

  1. The Nanjing Massacre: Scenes from a Hideous Slaughter 75 Years Ago

      13, 1937, Japanese troops captured the city of Nanjing, then the capital of ... Then and now, the Nanjing massacre remains one of the darkest ...
 

Thursday, December 13, 2012

End of Pax Americana


The report "Global Trends 2030: Alternative Worlds" forecast that US economic and international influence will decline in the next two decades as a shift of global power moves from the West to the East, and from the North to the South. Photo by gt2030.com

In a new report, the US National Intelligence Council predicts the winding down of "Pax Americana" and China's ascent as the world's top economy by 2030.

On Monday, the report "Global Trends 2030: Alternative Worlds" forecast that US economic and international influence will decline in the next two decades as a shift of global power moves from the West to the East, and from the North to the South.

Meanwhile, rising states such as China, India and other Asian nations will contribute an increasingly large share of global financial growth.

"With the rapid rise of other countries, the 'unipolar moment' is over, and 'Pax Americana' -- the era of American ascendancy in international politics that began in 1945 -- is fast winding down," the report states.

The report is largely optimistic about technological and economic advances in the next two decades. The numbers of people living in poverty is likely to drop sharply in East and South Asia, the Middle East and North Africa, with sub-Saharan Africa lagging behind.

"Under most scenarios -- except the most dire -- significant strides in reducing extreme poverty will be achieved by 2030," the report notes.

The report gives a list of eight "Black Swan" scenarios - a reference to Nassim Nicholas Taleb's book "Black Swan," which posits that history is built on unforeseeable, surprise events.

1. Severe Pandemic

"No one can predict which pathogen will be the next to start spreading to humans, or when or where such a development will occur," the report says. "Such an outbreak could result in millions of people suffering and dying in every corner of the world in less than six months."

2. Much More Rapid Climate Change

"Dramatic and unforeseen changes already are occurring at a faster rate than expected. Most scientists are not confident of being able to predict such events. Rapid changes in precipitation patterns—such as monsoons in India and the rest of Asia -- could sharply disrupt that region's ability to feed its population."

3. Euro/EU collapse

If Greece were to leave the euro zone in an unruly way, it could result in eight times the collateral damage as the Lehman Brothers bankruptcy, which could lead to a broader crisis in the EU in the future, the report says.

4. A Democratic or Collapsed China

"China is slated to pass the threshold of US,000 per capita purchasing power parity (PPP) in the next five years or so—a level that is often a trigger for democratization," the report notes. "Chinese 'soft' power could be dramatically boosted, setting off a wave of democratic movements. Alternatively, many experts believe a democratic China could also become more nationalistic. An economically collapsed China would trigger political unrest and shock the global economy."

5. A Reformed Iran

"A more liberal regime could come under growing public pressure to end the international sanctions and negotiate an end to Iran's isolation. An Iran that dropped its nuclear weapons aspirations and became focused on economic modernization would bolster the chances for a more stable Middle East."

6. Nuclear War or WMD/ Cyber Attack

"Nuclear powers such as Russia and Pakistan and potential aspirants such as Iran and North Korea see nuclear weapons as compensation for other political and security weaknesses, heightening the risk of their use. The chance of nonstate actors conducting a cyber attack—or using WMD (weapon of mass destruction) —also is increasing."

7. Solar Geomagnetic Storms

"Solar geomagnetic storms could knock out satellites, the electric grid, and many sensitive electronic devices. The recurrence intervals of crippling solar geomagnetic storms, which are less than a century, now pose a substantial threat because of the world's dependence on electricity," the report says.

8. U.S. Disengagement

"A collapse or sudden retreat of US power probably would result in an extended period of global anarchy; no leading power would be likely to replace the United States as guarantor of the international order."

Related post:
 Funding a foreign agenda

North Korea confirms successful satellite launch



Official media of the Democratic People's Republic of Korea (DPRK) on Wednesday confirmed that the country successfully launched and orbited an earth observation satellite.

"The successful launch of the satellite is a proud fruition of the Workers' Party of Korea's policy of attaching importance to science and technology," said news agency KCNA.

The success serves "as an event of great turn in developing the country's science, technology and economy by fully exercising its independent right to use space for peaceful purposes," it added.

According to the KCNA, a Unha-3 rocket carrying the second version of the Kwangmyongsong-3 satellite blasted off from the Sohae Space Center in Cholsan County, North Phyongan Province, at 09:49:46 local time (0049 GMT).

The satellite, said the KCNA, entered its preset orbit 9 minutes and 27 seconds after the lift-off, and then started going round the polar orbit at 499.7 km perigee altitude and 584.18 km apogee altitude at the angle of inclination of 97.4 degrees, with a cycle of 95 minutes and 29 seconds.

This year marks the 100th anniversary of the birth of late President Kim Il Sung, and this month marks the first anniversary of the demise of late leader Kim Jong Il.


1

Int'l Reactions
1 China "regrets" DPRK's satellite launch
China regrets the Democratic People's Republic of Korea's (DPRK) satellite launch amid the "universal" concern of the international community, a Foreign Ministry spokesman said on Wednesday.
1 White House reacts to DPRK launch
White House spokesman Tommy Vietor says US condemns the launch as a "highly provocative act" in direct violation of UN resolutions and vows to work with international partners to seek "appropriate action" against Pyongyang.
1 Russia voices regret over DPRK's rocket launch
Russia on Wednesday expressed "deep regret" over the rocket launch by DPRK, saying the move violated a UN Security Council resolution.
1 S.Korea's Lee convene security meeting following DPRK's rocket launch
South Korea strongly condemned North Korea’s rocket launch, saying that it violated a UN resolution and sent Aegis destroyers to trace the rocket.
1 Japan strongly protests against DPRK's satellite launch
Japan on Wednesday strongly protested against a satellite launch by DPRK, saying the launch was "unacceptable" and violates the United Nations' relative resolutions.
1 Philippines "strongly condemns" DPRK rocket launching
The Philippine government on Wednesday "strongly condemns" DPRK's rocket launching, saying that it violated an UN resolution.
1 New Zealand condemns DPRK satellite launch
The New Zealand government Wednesday condemned the launch of a satellite using long-range ballistic missile technology by DPRK.

Latest News
Russia voices regret over DPRK's rocket launch
Russia on Wednesday expressed "deep regret" over the rocket launch by the Democratic People's Republic of Korea (DPRK), saying the move violated a UN Security Council resolution.
DPRK succeeds in satellite launch, draws protests
The Democratic People's Republic of Korea (DPRK) on Wednesday successfully launched and orbited a satellite, the official news agency KCNA reported.
S&P says DPRK rocket launch has no material impact on S. Korea's sovereign ratings
The rocket launch of the Democratic People's Republic of Korea (DPRK) will have no material impact on South Korea's sovereign ratings, global credit rating agency Standard & Poor's said Wednesday.
DPRK's rocket launch has little impact on S. Korean financial market
The planned long-range rocket launch of the Democratic People's Republic of Korea (DPRK) had little impact on the South Korean financial market as the launch was pre- announced, market watchers said Wednesday.
DPRK confirms successful satellite launch
The Democratic People's Republic of Korea (DPRK) on Wednesday successfully launched a Kwangmyongsong-3 satellite, the official news agency KCNA reported. .
No debris fell into Japan's territory: Japan's govt
The Japanese government said Wednesday that no debris fell into Japan's territory after a rocket launch by the Democratic People's Republic of Korea (DPRK).
DPRK launches long-range rocket, first stage falls into Yellow Sea: report
The Democratic People's Republic of Korea (DPRK) fired off a long-range rocket mounted with a satellite Wednesday, defying expectations that technical problems might delay the mission that drew international attention.
By Agencies

Wednesday, December 12, 2012

HSBC Bank fined $1.92 billion for money laundering




British banking giant HSBC agreed to pay a record $1.92 billion settlement Tuesday after a broad investigation by U.S. federal and state authorities found the bank violated federal laws by laundering money from Mexican drug trafficking and processing banned transactions on behalf of Iran, Libya, Sudan and Burma

HSBC has agreed to pay $1.92 billion to settle a US money laundering probe. The British bank is alleged to have allowed clients with links to drug trafficking and terrorism to move money. 

The two sides reached a $1.92 billion (1.48 billion euros) settlement Tuesday, HSBC said.

"HSBC has reached an agreement with the United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanction laws," the bank said in a statement.

The settlement includes a five-year deferred prosecution agreement with the US Justice Department, which allows a subject under investigation to avoid prosecution if it meets conditions, such as paying fines.

Prosecutors had accused HSBC of allowing improper financial transfers from countries including Mexico, Iran and Saudi Arabia by clients linked to international crime, including drug trafficking and terrorism.

The bank apologized soon after, and acknowledged the firm lacked controls to prevent money laundering.

'Profoundly sorry'

"We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," said group chief executive Stuart Gulliver in a statement.

"We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world," Gulliver said.

HSBC's announcement comes one day after another British bank, Standard Chartered, agreed to pay some $327 million (253 million euros) to settle charges it violated US sanctions by channelling money to clients in Iran and Sudan.

dr/msh (AFP, dpa, AP)

Related:
Citigroup to sack more than 11,000 jobs 

Tuesday, December 11, 2012

Philippines wants rearmed Japan to contain China

The Philippines said Monday that it supports Japan dropping its pacifist constitution and acting as a balance against China, while experts say that Manila and Tokyo will join forces more closely on South China Sea issues.

In an interview with the Financial Times, Foreign Secretary Albert del Rosario said the Philippines would strongly support a rearmed Japan as a counterweight to "Chinese provocation." 

Also on Monday, Chinese foreign ministry spokesman Hong Lei said at a regular press briefing that "China hopes the concerned parties on the South China Sea issue take regional peace and stability as a priority and generate more efforts to increase mutual trust and cooperation."

Hong's remarks came after a Philippines-proposed meeting among four Southeast Asian claimants to the South China Sea for this month in Manila was postponed. 


Manila's support for Tokyo to rearm comes shortly before a general election in Japan, where the front-runner, opposition leader Shinzo Abe, has said he wants to revise the country's pacifist constitution, imposed by the US after the war. 

"Albert del Rosario's view reflects Manila's strategy. The Philippines could not rally support among Southeast Asian countries and is turning to Japan, which shares a common interest with the Philippines on maritime disputes against China," Zhuang Guotu, head of the Center for Southeast Asian Studies at Xiamen University, told the Global Times. 

"No matter who wins the general election in Japan, Tokyo and Manila will cooperate more closely to act against Beijing's territorial claims," Zhuang said, adding that the Philippines needs Japan to upgrade its maritime forces. 

In 2014, the Philippine Coast Guard will receive 12 patrol boats from Japan, the Philippine Daily Inquirer reported on November 25. Both Manila and Tokyo have been involved in severe territorial disputes with Beijing this year. 

By Xu Tianran
AFP contributed to this story

Funding a foreign agenda

IN the midst of all the talk about integrity and democracy in Malaysia, a practice which is of tremendous significance to both has not received the attention it deserves. This is the funding of political parties.

Political parties are not keen on detailed scrutiny of their funding since it does not serve their interests.

Politically inclined NGOs have also not championed this cause partly because many of them are aligned to either the Government or the opposition.

And yet this is one area where there is an imperative need for greater accountability, transparency and honesty.

In this regard, the Malaysian parliament took an important step forward in April 2012 by accepting the proposal from a parliamentary select committee to allocate funds to political parties based on the quantum of seats secured by a party in the general election.

If political parties draw their funds from an independent public institution directly responsible to parliament and the state assemblies, the scope for electoral corruption may be reduced.

Wealthy individuals and corporations may not be in a position to influence elections and politics.

However, public funding of party and electoral politics need not preclude private financing of political party activities provided it is governed by strict rules of accountability and disclosure.

To ensure accountability, it may be necessary to register political parties under a separate law.

At the moment, they are governed by the Societies Act which covers a whole spectrum of civil society entities.

A law that is specific to political parties will also help to define their roles and responsibilities – including how they are funded – in a more transparent manner.

This has become even more urgent today because the forces that shape the role of a political party and its electoral performance are no longer confined to the domestic arena.

There are actors beyond our shores who have no qualms about sticking their noses into our politics.

Sometimes their local clients invite them to interfere in our affairs.

I had a taste of this in 1999 when I was deputy president of an opposition party, Parti Keadilan Nasional, now Parti Keadilan Rakyat.

A few weeks before the 1999 general election an emissary of the currency speculator, George Soros, came to see me in my office in Petaling Jaya about an alleged request from the de facto leader of Keadilan for funding for the party in the elections.

Apparently, the de facto leader’s trusted aide had got in touch with media mogul, Rupert Murdoch, on his boss’ behalf, about financial assistance for the party.

Murdoch in turn had passed on the request to his friend, Soros, who had sent the emissary on his behalf.

I told the emissary that Keadilan will not accept funds from foreign sources and there was no question of Soros or anyone else funding the party’s election campaign.

That evening I informed the party president about what had transpired at my meeting with Soros’s emissary and requested her to find out from the de facto leader, her husband (who was then in prison), whether there was any truth in what the emissary had conveyed to me.

According to the party president, the de facto leader had denied any knowledge of a request to Murdoch for funding and Soros’ involvement. I believed him and let the matter rest.

However, since 1999 a lot of evidence has emerged of funds from Soros’ outfits being channelled to organisations affiliated to, and associated with, the de facto leader and Keadilan.

A former Keadilan Youth leader has even sworn in the National Mosque that the party has received foreign funds.

In July 2011, a leader of Bersih, the coalition for clean and fair elections, admitted that her organisation had received money from Soros’ Open Society Institute (OSI) and the National Democratic Institute (NDI) which is funded by the US National Endowment for Democracy (NED).

There is no need to emphasise here that Soros and the NED have been hyperactive in numerous countries in almost every continent, in the pretext of promoting human rights and democracy when their real goal is the furtherance of the US foreign policy agenda.


 The NED for instance established in 1983 which operates in more than 90 countries has been rightly described by William Blum, a former US State Department official and author of Rogue State and Killing Hope as a “Trojan Horse.”

He observes that the NED does “overtly what the CIA had been doing covertly for decades, and thus, hopefully, eliminate the stigma associated with CIA covert activities.”

The NED “meddles in the internal affairs of foreign countries by supplying funds, technical know-how, training, educational materials, computers, fax machines, copiers, automobiles and so on, to selected political groups, civic organisations, labour unions, dissident movements, student groups, book publishers, newspapers, other media, etc.”

In the last 10 years or so the NED has carried out many of these activities in collaboration with the type of groups mentioned by Blum here in Malaysia.

Why is the NED which is funded entirely by the US government playing this game in Malaysia when the Malaysian Government, especially in the last few years, has gone out of its way to foster closer ties with the US?

In spite of the increasingly warm relations, there are elements in our foreign policy which do not blend with US interests.

On the question of Israel and the struggle of the Palestinian people, Prime Minister Datuk Seri Najib Tun Razak continues to adhere to the principled policy of his predecessors.

He is not prepared to express concern for Israel’s “security,” unlike the leader of the Opposition who knows that “security” is the code-word that the Israeli elite and their supporters in the US and the West look for in assessing a leader’s attitude to Israel.

Neither has Najib shown any inclination to endorse the US agenda of containing China which in the context of East Asia is undoubtedly the US’ central preoccupation.

As the US projects itself as the pivot of the Asia-Pacific and, in the process, attempts to curb Chinese influence in the region, it wants to be absolutely certain that it has allies and not just friends in Asean.

And who can be a better ally than someone who not only sits on panels funded by the NED and Soros outfits but has also, over the years, developed strong ties with powerful personalities and lobbies at the very core of the ‘deep state’ in the US – the deep state that actually determines the direction of US foreign policy, regardless of who lives in the White House?

These are some of the fundamental issues that Malaysians should try to understand as they attempt to make sense of the Malaysian political landscape on the eve of the 13th general election.

For in the ultimate analysis what is at stake is our dignity as an independent and sovereign nation.
Protecting that dignity is part of the mission of Yayasan 1Malaysia.

DR CHANDRA MUZAFFAR Chairman, Board of Trustees
Yayasan 1Malaysia

Related posts/Articles:
Foreign funding for political purposes in Malaysia 22 Sep 2012
Soros link kept under wraps
Malaysiakini admits to receiving foreign funds

Monday, December 10, 2012

Falling foul of the tax law

Many tax offences arise due to failure to correctly discharge filing obligation

MOST of us would not ever think of cheating when we file our tax returns. This does not however mean that one cannot fall foul of the tax law. This is in part due to the fact that tax laws generally are amongst the most complex of a country's set of laws, and our own tax law is no exception.

Often it is not the complexity of the law that catches one out but simple failure to follow procedures, the most common of which involves keeping to set time frames, whether in the filing of returns, paying of one's taxes or providing information to the tax man.

Thus the instances when one can be in breach of the tax law are quite varied and extensive. All such breaches are serious offences, some more serious than others.

Our tax law adopts the declaratory system one is required to declare income via the filing of returns to the tax authority. Many tax offences arise due to failure to correctly discharge this filing obligation.

The most obvious offence is not filing a tax return, or not filing within the stipulated time frame.

An Inland Revenue Board officer helping taxpayers filing their submission
.
In filing the return, an offence is committed if the return filed is incorrect. A return would typically be incorrect if income is omitted or a lesser than actual sum is included. Likewise, more deductions claimed than one is entitled to would result in incorrect filing.

An innocent mistake may not be regarded as cheating but it is still an offence especially when it results in less tax being charged. Generally the severity of penalties varies with the level of the offence's blameworthiness.

An offence involving willful intent to defraud would be amongst the most serious, bringing about the prospect of imprisonment if convicted. Details of the range of penalties for various offences are listed on the official website of the Inland Revenue Board (www.hasil.org.my).

An offence of “not taking reasonable care” was introduced with the implementation of the self-assessment system. This is entirely justifiable as the filing of a tax return is in law the making of an assessment on oneself upon which tax becomes payable.

The aim is to ensure that a “degree of care or conscientiousness” is exercised in connection with the preparation and filing of a tax return. It is intended to prevent the adoption of a reckless or careless approach to the task and to penalise any breach where it results in tax underpaid.

Thus with this standard, claiming a deduction for a capital expense would constitute an offence of not taking reasonable care, even where its capital nature is not quite obvious. The law presumes that a reasonable person would seek to determine the true nature of the expense.

The “reasonable care” requirement was also introduced by Australia when it implemented self-assessment some years before we did. Since the standard is derived from the common law on negligence, features of the “reasonable care” standard adopted in Australia should apply equally to the Malaysian provision.

However, a taxpayer who fails to take “reasonable care” under the Malaysian law is liable to prosecution and, if convicted, is liable to a fine of not less than RM2,000 and not more than RM20,000 or to imprisonment for a term not exceeding three years or to both. This is in fact harsher than an offence of willful intent to evade tax.

There seems to be an obvious anomaly here as the offence of failing to take reasonable care does not involve bad intent, what lawyers would term mens rea. Australia treats the offence as amongst the least culpable of tax offences, certainly less so than intentional disregard of taxation law.

A controversy resulting in considerable bemusement arose in Australia recently where its Appeals Tribunal in a tax appeal ruled that a taxpayer in seeking the advice of an accountant had not taken reasonable care; he should have used the services of a lawyer. Understandably, this resulted in consternation and dismay amongst both tax accountants as well as tax lawyers for quite different reasons; the latter over concerns that their numbers are fewer in this specialism.

A further difference is that the Australian law requires both the taxpayer and his advisor to take “reasonable care”, whereas the “reasonable care” standard under Malaysian law applies only to the “person who advises or assist” the taxpayer but not the taxpayer himself. Why this is so is not clear.

The Australian “reasonable care” standard is coupled with the “reasonably arguable case” standard.

Where the law is unclear and there is room for a real and rational difference of position between two views, and the taxpayer adopts the view, which ultimately is seen to be wrong, he would in strictness have made an incorrect return.

In Australia, no penalty is imposed where a “reasonably arguable case” is made out.
This recognises that the intricacies of tax law often does mean that the taxpayer could be forced to take a contentious position, one where the arguments could go either way. If the weight of arguments is fairly balanced, imposing a penalty for taking an incorrect position would seem manifestly unfair.

Our tax authorities do exercise discretion in considering the question of penalties despite the absence of the equivalent Australian standard.

However, this does not detract from the fact that the taxpayer will always prefer to see his right spelled out in the law. On the basis of balance of rights, there seems to be no cogent reason why the “reasonably arguable case” standard should be left out from the Malaysian tax legislation.

Kang Beng Hoe is an executive director of TAXAND MALAYSIA Sdn Bhd.The views expressed do not necessarily represent those of the firm. Readers should seek specific professional advice before acting on the views.

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