Malaysia’s former prime minister, Najib Razak, and his son, Mohd Nazifuddin Najib, have been ordered to pay over US$407 million in tax arrears, facing bankruptcy proceedings initiated by the Inland Revenue Board. The High Court dismissed their appeal to halt the process, following their failure to settle significant tax liabilities.
Court’s Decision on Bankruptcy
On Monday, Judicial Commissioner Suhendran Sockanathan ruled that there was no reason to stay the bankruptcy proceedings against Najib and his son. The court also ordered them to pay 7,000 ringgit in costs. The dismissal of the appeal means the tax arrears of 1.69 billion ringgit (about US$407 million) for Najib and 37.6 million ringgit for his son, remain due.
The court emphasized that the role of the judiciary was limited to facilitating the collection of taxes, with disputes to be addressed through the Special Commissioners of Income Tax, not the court. This aligns with the “pay now, dispute later” principle embedded in the Income Tax Act.
Background of the Tax Arrears
The tax arrears stemmed from the period between 2011 and 2017, and the Malaysian government has been attempting to recover these funds for several years. Despite appeals and various legal challenges, the courts ruled that Najib and his son must pay the arrears.
In 2020, Malaysia’s High Court granted a summary judgment against the duo, allowing the government’s revenue board to move forward with efforts to recover the funds. A summary judgment, which bypasses a full trial, was granted based on written submissions, without calling witnesses.
The Role of the 1MDB Scandal
The tax arrears are part of the broader financial issues faced by Najib, stemming from his involvement in the infamous 1MDB scandal, which has rocked Malaysia’s political and economic landscape. Najib’s conviction in multiple corruption cases continues to affect his legacy and has further deepened public scrutiny.
Federal Court Ruling and Next Steps
In October 2023, the Federal Court upheld the High Court’s decision, ruling that Najib and his son must pay the tax arrears. The bankruptcy proceedings against them are now in full motion, and the government’s revenue board is actively seeking to recover the debts.
The outcome of this case has far-reaching implications for Najib and his family, signaling further financial and legal battles. As the legal process continues, many are watching closely for any further developments in the case.
