KUALA LUMPUR (Aug 8): MK Land Holdings Bhd (KL:MKLAND) said on Thursday it has reached a settlement with the tax authority that would cut the additional bills and penalty imposed on its unit by nearly 85%.

Under the settlement agreement with the Inland Revenue Board, the taxes payable by Saujana Triangle Sdn Bhd would be reduced to RM12.16 million from RM80.77 million, MK Land said in an exchange filing. The settlement was recorded at the Special Commissioners of Income Tax, it noted.

The amount will be settled progressively by Dec 15 this year, MK Land said, adding that the agreement will not materially impact the company’s finances.

In 2017, Saujana Triangle received notices of assessment for additional income taxes of RM55.7 million for the years 2009 to 2011, and a 45% penalty of RM25.07 million for the year 2013.

MK Land contended that the Inland Revenue Board had treated gains from land sales in 2009 as revenue rather than capital. Further, the Inland Revenue Board had also ignored the five-year limitation for raising the assessments while disallowing certain development costs as only provisions.

The company also believed that the land sales of the investment properties are capital transactions which are liable to real property gain tax (RPGT) in assessment year 2009.

RPGT, which is a form of capital gains tax that is imposed on property disposal gains, was suspended during the global financial crisis between 2007 and December 2009. It was subsequently reinstated in 2010, but at much lower rates than those prevailing prior to 2007.

MK Land’s shares closed unchanged at 20 sen, giving the company a market value of RM229.22 million.