Najib fails in bid to delay paying RM1.69b in tax as court rules all taxpayers are equal before the law

KUALA LUMPUR (June 14): Former prime minister Datuk Seri Najib Abdul Razak failed in his application for a stay of a decision by the High Court last July 22 to allow the Inland Revenue Board (IRB) to enter a summary judgement against the politician and require him to pay tax arrears of RM1.69 billion.

High Court judge Datuk Ahmad Bache in a decision via email sighted by theedgemarkets.com said Najib had no strong grounds for a stay of execution.

Upon dismissing the stay application, the judge also asked Najib to pay legal costs of RM15,000.

“After hearing submissions by both parties and having considered the firm position of the law above and the reasons advanced by the defendant (Najib) and replies by the plaintiff (IRB), this court holds that the defendant has no strong grounds for a stay of execution to be granted as the defendant had failed to discharge the burden of proving the existence of 'special circumstances' to the satisfaction of this court,” Justice Ahmad said.

Justice Ahmad said there cannot be “special circumstances” for Najib as the IRB is empowered to collect taxes under the Tax Act 1967. In effect, this means that the IRB is allowed to proceed with its bankruptcy proceedings against him.

Justice Ahmad also said every taxpayer, including Najib, is equal before the law and that Najib should have known when to pay his taxes.

“This court holds that this position of the law regarding tax recovery applies to every taxpayer, including the defendant (Najib) as every taxpayer (just like every citizen) are equal before the law. As held by this court in the summary judgment dated July 22, 2020 earlier, the defendant as a former minister of finance should know and ought to have known these provisions of the law, as LHDN as the collection agency, was under his purview at the material time and the amount involved is huge,” he said.

He said that if the court had allowed the stay application, it would set a bad precedent for other taxpayers to avoid paying taxes.

“It will set a bad precedent to be followed and used by other taxpayers as a ground to avoid and/or delay paying taxes and giving rise, albeit wrongly, to an inference that ‘double standards’ are being allowed and being practised,” the judge said when explaining his decision.

“This court also holds that if this stay of execution is allowed by this court, the plaintiff (IRB) will be stopped from filing any recovery actions provided under the Tax Act against the defendant (Najib),” he said.

Najib is also appealing before the Special Commissioner of Income Tax (SCIT), which has been fixed for July 27.

The judge also said should Najib succeed in his appeal with the SCIT, the government will have the monetary ability to compensate him.

“There is no unquantifiable loss that could not be recovered from the plaintiff should the defendant succeed in this appeal. On the other hand, the defendant has not shown any cogent evidence to prove the plaintiff’s inability to compensate. All these reasons merit consideration and that the balance should tilt in favour of the plaintiff to not granting the stay,” he said.

The judge, however, did note that all is not lost for Najib, as he can still negotiate with the government and the IRB for payments to be made pending disposal of the SCIT appeal.

He also pointed out that the government had stated that it was open to discussions with Najib regarding payment, even through instalments.

However, while Najib had made efforts to meet with the IRB for discussions, the former premier made no move to pay the backdated taxes in instalments.

“This court believes that the plaintiff through IRB is always open for discussion regarding payment. More often than not, IRB subscribes to a payment scheme whereby the taxpayer will be allowed to pay by instalments, agreed upon by both parties in a 'win-win' situation.

“This court takes judicial notice of this good and noble practice because about 90% of income tax cases registered before this court in one calendar year were settled in that fashion, avoiding unnecessary trials and saving judicial time,” he said.

He ended by saying that Najib and the government can still agree upon a suitable settlement pending disposal of his appeal at the SCIT.

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