Shafee tells court Najib’s tax appeal would be moot if LHDN insists on ‘pay first, talk later’

PUTRAJAYA, July 3 — Lawyer Tan Sri Shafee Abdullah argued before the Court of Appeal today that failure to stay the Inland Revenue Board’s (LHDN) case against ex-prime minister Datuk Seri Najib Razak would render his appeal before the Special Commissioners of Income Tax (SCIT) in September “meaningless.”

Speaking before a three-member bench chaired by Justice Datuk Alwi Abdul Wahab, Shafee contended that proceeding with the bankruptcy action would be “akin to entering the boxing ring with both hands tied,” Free Malaysia Today reported.

He warned that a bankruptcy declaration would not only bar Najib from various activities but would also strip him of control over his assets, placing them under the authority of the director-general of insolvency.

The dispute centres on an additional tax assessment of RM1.69 billion for the 2011 to 2017 period, stemming from an alleged RM8 billion donation that Najib maintains was used for political and welfare activities.

The LHDN, represented by senior revenue counsel Norhisham Ahmad, countered that there are “no special circumstances” to justify a stay.

Ahmad leaned on a Federal Court ruling from October 2023 that upheld the “pay first, talk later” principle, which mandates that tax assessments must be settled regardless of any pending appeals.

The bench, which includes Justices Datuk Shahnaz Sulaiman and Datuk Ong Chee Kwan, has set September 4 for its decision.

This hearing follows a November 17 ruling last year, in which the High Court dismissed applications by Najib and his son, Nazifuddin, to stay bankruptcy proceedings over unpaid tax arrears of RM1.69 billion and RM37.6 million, respectively.

The court affirmed that pending appeals do not shield taxpayers from recovery actions.

Najib continues to challenge two bankruptcy notices, arguing that the assessments, which climbed from RM1.46 billion to RM1.69 billion due to penalties and interest, are flawed and should not be enforced while related proceedings remain active.