KUALA LUMPUR — The Court of Appeal yesterday directed the Director-General of Inland Revenue (DGIR) to refund RM15.672 million to Petronas within six months for taxes overcharged during the 2010 assessment year.
The overcharge stemmed from the disallowance of expenses linked to Petronas' overseas country-office operations in Sudan and Vietnam, Bernama reported.
The three-member bench, led by Justices Datuk P. Ravinthran, Datuk Wong Kian Kheong, and Datuk Nadzarin Wok Nordin, made this ruling after allowing an appeal by Petronas.
The disputed expenses were initially deemed non-deductible by the High Court under Section 15(1) of the Petroleum (Income Tax) Act 1967 (PITA), as it ruled that Petronas could not claim deductions for its country-office expenditures.
Delivering the decision, Justice Wong stated that both the High Court and the Special Commissioners of Income Tax (SCIT) had incorrectly ruled that Petronas was not entitled to deduct these expenses.
He noted that Petronas had filed its 2010 tax return within the prescribed time and paid all due taxes promptly, dismissing the DGIR's claim of negligence. Even if there were any oversight in the submission, the High Court and SCIT had failed to determine if this negligence contributed to the tax loss.
Justice Wong further emphasised that both the High Court and SCIT should have acknowledged that these country-office expenses were incurred outside Malaysia.
“In light of these legal errors, particularly by the SCIT and High Court, the DGIR is prohibited under Section 39(1) of PITA from issuing the additional assessment, and we set it aside,” he said.
The Court ordered that RM11,392,044 and RM4,280,556 be refunded to Petronas within six months.
No order as to costs was made, following an agreement between the parties involved.
Petronas was represented by lawyers S. Saravanan Kumar and Nur Amira Ahmad Azhar, while Senior Revenue Counsel Ashrina Ramzan Ali and Revenue Counsel Nik Amyrah Syarinie Mohd Dusuki appeared for the DGIR. - January 30, 2026
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