REINSTATEMENT OF HOSPITAL LAM WAH EE’S TAX EXEMPT STATUS
We refer to the recent media statement that the Ministry of Finance (MOF) had reinstated Hospital Lam Wah Ee’s (HLWE) tax exempt status in April 2021. The Hospital’s Board of Directors wish to highlight that this approval is very different from the original tax exempt status which was withdrawn on 10 June 2020.
The tax exempt approval from the MOF vide their letter dated 7 April 2021 is limited to donations from the public to the NEW Welfare Fund to be set up in accordance to the Inland Revenue Board’s (IRB) new policy guidelines.
Donations to the new Welfare Fund shall be used only for discount of medical bills of patients who meet the requirement after review.
HLWE is an independent, charitable, not for profit hospital with a long history in Penang, providing affordable quality medical services to the public. Hence, HLWE’s original tax exempt status was granted for the following incomes:-
a. surplus revenue from medical services
b. other incomes such as rental income and interest income
c. donations or contribution from the public for development, medical services or welfare aid for patients
Unfortunately, the abovementioned tax exempt status not only was it withdrawn in June 2020 but retrospective to year 2016. Also, HLWE was directed to immediately pay tax for YA2016 in addition to late payment penalty. HLWE had appealed to the MOF last year but has not received any reply to date.
As a not for profit hospital, HLWE strives to help deserving patients by levying low bed charges and out patient charges.
Common ward charges are priced at RM30 per bed per night (inclusive of 5 meals per day and nursing care) and 25% – 40% discount on specialist doctors’ fees. Subsidy to cover the cost of common ward beds exceed RM15 million a year. In addition, the subsidy for outpatient charges amounts to RM10 million a year. Total subsidies amount to RM25 million a year supported by public donations (approximately RM2 million a year) and annual cross subsidy from excess revenue from 1st and 2nd class wards.
Following the withdrawal of the original tax exempt status and replaced by the new tax exempt status limited to donations to the new Welfare Fund, all income and donations from the public (apart from donations to the new Welfare Fund) are liable to 24% tax. This will affect the income stream and strains HLWE’s finances.
The Hospital’s Board of Directors shall follow through with the MOF and IRB on the setting up of the required new Welfare Fund. Nonetheless, we appeal that the original tax exempt status can be reinstated as soon as possible.
For the public’s information, pending the availability of detailed guidelines from the MOF to set up the new Welfare Fund, HLWE regrets that it is unable to issue tax exempt receipts for all donations including donations or general contributions not for the said new Welfare Fund.
For the benefit of the public, we appeal to the MOF to consider our appeal for full reinstatement of tax exempt status on all incomes to HLWE as soon as possible. We appeal to the public to continue to contribute to HLWE to overcome this tight financial situation.