Thursday, January 21, 2010

AirAsia 18 Billion Tax Issue

Yesterday MIB, Maybank Investment Bank, had a research report on AirAsia.

Here's the snippet.

Now I am not (typo!) deeply concerned with this revelation.


This is an rm 18 Billion concern for me.

In the posting AirAsia's deferred taxes issue.

  • Solid theoretical backing for AirAsia’s accounting policy. We believe that AirAsia has a strong case for its non-provision of deferred taxes. With capital allowances and investment allowances likely to come to RM18bn in total, the company will not have to pay cash taxes for decades. In these circumstances, a deferred tax liability provision will not be a true and fair reflection of the company’s financial position. With the MOF now seeking input from the "big four" audit firms, we think that a solution in favour of AirAsia will be found soon.

Well as per latest (see posting What AirAsia Said About Its Earnings Performance ), AirAsia has so far 930.591 million in deferred taxes!

Well as a wholly owned Malaysian company, some could argue that perhaps we, Malaysia, should attempt to develop a strong global company and in order to help achieve this goal, perhaps some sacrifice should be made. Sacrifice like granting AirAsia deferred taxes. However, some might disagree and argue that the taxes should not be deferred and the money collected from these taxes could help the whole country instead of helping just one company.

Well this could be a massive debate.

However, this new MIB research report has now put the tax issue in a whole new perspective!


Well simple. Since the ownership of AirAsia now has more foreigners than Malaysians, then why should the company continue to enjoy this deferred tax???

My friends... rm 18 Billion ... that's a whole lot of small change, yes?



see also More On AirAsia Deferred Tax


Unknown said...

Can you explain defered tax.Why enjoy?

random said...

means tax that is postponed to a later date

solomon said...

My dear Spider Moolah,

Does it means that Deferred tax asset(DTA) = Higher Capital Allowance Tax than the depreciation?

It sounds to me closing the tap on foreigners' fuel subsidies but on the other hand open another tap indirectly for foreigners who own Airasia for DTA? If DTA is viewed as another incentives/subsidies, does this means no savings yet to the country piggy bank?

Well, could you tell me what does the big picture implies? Or perhaps "ada pening jadi ada peningkatan" (English translation : got headache means got improvement)Ha ha