PETALING JAYA: A tax expert says the Inland Revenue Board (LHDN) is likely to take legal action to recover over RM1 billion in tax arrears from former prime minister Najib Razak following a court decision allowing the agency to proceed with a summary judgment to recover additional claims and taxes for the RM2.6 billion he received in 2013.
The industry veteran who declined to be named said according to the law, Najib had to pay the money claimed by LHDN first.
The Kuala Lumpur High Court yesterday allowed LHDN to proceed with a summary judgment to recover RM1.69 billion from the sum which Najib claimed he had returned four months after receiving in 2013.
He also said another RM632 million which came from the Saudi Arabian finance ministry was a foreign contribution and should not be taxed.
“Najib now has to appeal to the Special Commissioners of Income Tax, which is a tribunal to hear and determine appeals from taxpayers pursuant to the Income Tax Act 1967,” the expert said.
According to the expert, the Special Commissioners of Income Tax typically comprises a panel of three people with legal backgrounds who are well-versed in tax laws.
“They will determine the facts of the case and make a decision based on the law.”
The expert said the central issue which the tribunal would need to determine in Najib’s case was whether the money he received was a donation or income.
“Najib will have to prove it was a donation while LHDN will have to prove it was income.
“If it was income, what type of income was it? From employment, dividend, or casual income?”
In general, the expert said, money that was not a form of income like donations was not taxable.
“It doesn’t matter whether a donation is a political donation, the rules are the same: donations are not taxable.”
The key, the expert added, was for Najib and LHDN to prove their stands.
“Whoever loses can and will likely appeal their case at the High Court.”
In a Facebook post yesterday, Najib said “the truth will prevail” when the matter is brought before the Special Commissioners of Income Tax.