KUALA LUMPUR: Cocoaland Holdings Bhd will have to pay very much lower additional income tax and penalty to the taxman after the Inland Revenue Board (IRB) allowed the claim of reinvestment allowance on certain plant and machinery.

The confectionery manufacturer said on Tuesday it would now have to pay RM14,847 following its successful appeal against the earlier amount of RM5.88mil imposed by the IRB.

The RM5.88mil was for the initial tax audit findings for the years of assessment 2010 to 2014 showing an additional income tax of RM4.06mil and 45% penalty of RM1.82mil totalling RM5.88mil.

To recap, Cocoaland said the additional income tax and penalty imposed by the IRB was mainly due to the reinvestment allowance claimed on certain plant and machinery that was disallowed on the basis that the capital expenditure incurred did not qualify and meet the requirements stated in Paragraph 8 of Schedule 7A to the Income Tax Act 1967.

Following the meeting between the management of the company together with the tax consultant and the IRB, the company had received a revised tax audit findings for the years of assessment 2010 to 2014 from the IRB on Dec 6.

“The outcome was positive as the IRB has allowed the claim of reinvestment allowance on certain plant and machinery disputed in the initial tax audit findings dated Oct 19. 

“As a result, the revised tax audit findings show an additional income tax of RM10.24mil and 45% penalty of RM4.60mil totalling RM14,847.62,” it said.