The Inland Revenue Board (IRB) has withdrawn the appointment of the Port Klang Authority (PKA) as collecting agent for taxes allegedly owed by Kuala Dimensi Sdn Bhd (KDSB).

In a three-paragraph statement today, IRB said the withdrawal was due to an objection letter from the PKA, as well as a letter of appeal from KDSB which has disputed claims that it has outstanding taxes.

NONE“In light of the recent communication by KDSB disputing the assessments, we have withdrawn the appointment of PKA under Section 68 of the (Income Tax Act 1967) and we will deal directly with KDSB on the payment of tax,” said IRB public relations officer Masrun Maslim.

Last Wednesday, the IRB had directed PKA to stop payments due to KDSB bond holders in the troubled Port Klang Free Zone (PKFZ) project.

Instead, IRB invoked the law to compel PKA to act as a collecting agent and remit RM328.4 million, allegedly owned by KDSB in outstanding taxes - a charge which KDSB denies.

However, the government yesterday undertook to make the payment through PKA.

NONE“We have a commitment to the bondholders, therefore we have to fulfill it," Deputy Transport Minister Abdul Rahim Bakri told the Dewan Rakyat yesterday.

Following this, PKA said it would appeal to IRB to revoke the directive to pay the bond holders.

"When we receive the letter from the IRB revoking the appointment, we will pay the bond holders immediately,” said PKA chairperson Lee Hwa Beng.

Backed by Transport Ministry 'support letters', KDSB had managed to raise RM4.6 billion in bonds to fund the project, which is now under scrutiny due to massive cost overruns.