No stay on IRB's RM313m tax assessment against Daim's wife

The Shah Alam High Court denied former finance minister Daim Zainuddin's wife's application for an interim stay against the Inland Revenue Board’s (IRB) RM313 million recovery against her.

Judge Shahnaz Sulaiman dismissed Nai'mah Abdul Khalid's bid to maintain the status quo pending disposal of her ongoing judicial review challenging the tax assessment.

She pointed out that Malaysia’s tax system is governed by the “pay first, talk later” system, whereby a taxpayer must first make payment on the assessment by the IRB before he or she files a tax-reassessment bid with the tax authority.

The civil court judge referred to Section 103(1) of the Income Tax Act 1967, which states tax payable for an assessment year shall be due and payable on the due date regardless of whether the taxpayer appeals against the assessment.

Shahnaz pointed to the principle laid down by last year's apex court ruling in a tax-related appeal by former prime minister Najib Abdul Razak and his son, which was that IRB tax collection is accorded immediacy while disputes raised by taxpayers are referred for adjudication later.

The revenue authorities have an ongoing bid to recover RM1.69 billion and RM36.7 million in alleged owed taxes by Najib and businessperson Mohd Nazifuddin.

"On the issue of the enormous sum of tax that is due (by Na'imah), this court is of the considered view that what amounts to a large sum is relative.

"To the man on the street, a tax assessment of RM30,000 may be massive. Yet, as provided for under the ITA 1967, the man on the street is still required to make the payment of this amount.

"The law applies equally to all. Whether the tax assessment is RM300,000 or RM30 million, the law should and must be applied to alike," Shahnaz said in the written grounds of judgment dated today.

The judge noted that collected tax can be returned to Na'imah in the event that the taxpayer succeeds in any tax-reassessment appeal with IRB.

Shahnaz added that the civil court is satisfied there are no exceptional circumstances that justify an interim stay order against the tax authority.

One of Na'imah's counsels from the law firm Rosli Dahlan Saravana Partnership confirmed to Malaysiakini that they would be appealing to the Court of Appeal.

‘Erroneous and baseless’

In her judicial review leave application filed on August 19, Na’imah claimed that the IRB assessment for the year 2018 was erroneous and baseless via the addition of RM700 million in alleged undeclared income.

The 66-year-old claimed that the respondent’s assessment notice dated Aug 13 rests solely on baseless accusations and that the audit appeared malicious.

“The respondent’s decision has arbitrarily created a substantial tax liability amounting to RM313,820,336.13 when in the first place, the respondent’s conduct in raising the impugned assessment is wrongfully imposed on me and the said sum is large and burdensome.

“It is unreasonable to expect an individual to immediately procure such a large sum within 30 days,” contended Na’imah in her affidavit.

She claimed that the IRB also failed to pay out RM3.807 billion in tax refunds owed to her for the assessment years 2017 and prior.

“This honourable court should bear in mind the possibility of arbitrary or incorrect assessments, brought about by fallible officers who have to fulfil the collection of certain publicly declared targeted amount of taxes and whose assessments, as a result, may be influenced by the target to be achieved rather than the correctness of the assessment.

“With respect, the prime minister had publicly declared that the income tax collection target increased to RM197 billion this year,” Na’imah contended.

Na’imah and Daim, 85, are also facing separate criminal court cases linked to the couple’s alleged failure to abide by MACC notices to declare their assets.

Senior revenue counsel Ahmad Isyak Mohd Hassan appeared for the IRB.

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