In a significant legal ruling, the High Court has ordered Toh Puan Naimah Khalid, wife of former finance minister Tun Daim Zainuddin, to pay RM313.8 million in tax arrears to the Inland Revenue Board (LHDN), despite her ongoing efforts to challenge the demand. The court refused her application for an interim stay, meaning she must settle the amount first before continuing her dispute over the tax assessment.
Justice Shahnaz Sulaiman, presiding over the case, referenced Section 103(1) of the Income Tax Act (ITA) 1967, which mandates that all taxes assessed must be paid by the due date, irrespective of any pending appeals. The judge emphasized that the principle of "pay first, dispute later" is a key tenet of the Act and had been upheld by the Federal Court in prior rulings. According to this legal framework, any taxes paid can be refunded if the appeal ultimately proves successful.
Naimah had sought a judicial review to challenge LHDN's demand, arguing that the board had incorrectly applied provisions of the ITA 1967 when issuing the notice of additional tax for the 2018 assessment year. She claimed that the hefty sum was related to an increase in her shareholding in Ilham Baru Sdn Bhd and that LHDN had raised concerns about her use of allegedly undeclared income to finance a loan involving Ilham Baru, Ilham Tower Sdn Bhd, and Welberton Private Equity Corp.
Moreover, LHDN claims Naimah owns properties in the United States, including units at Nantasket Beach Resort Hotel in Massachusetts and the Hotel Buckminster and Annex in Boston, which she allegedly failed to declare. The board estimates the value of these properties at over RM700.6 million. However, Naimah argues that these properties were purchased more than three decades ago and cannot be valued based on 2018 market prices.
In rejecting Naimah's request for an interim stay, Justice Shahnaz dismissed her argument that the large sum warranted exceptional consideration. The judge noted that the perceived magnitude of the tax amount is relative and that all taxpayers, regardless of the amount, are subject to the same legal obligations. "To the man on the street, a tax assessment of RM30,000 may be massive," she said, yet under the ITA 1967, payment is still required.
Naimah's legal team, led by lawyers DP Naban and Darshini Sharma, continues to pursue her application for judicial review to quash LHDN’s demand. Revenue counsel Ahmad Isyak Hassan represented the LHDN in court.
The ruling underscores the stringent tax laws in Malaysia, reinforcing that the obligation to pay taxes applies equally to all, regardless of status or the size of the tax bill. The case also highlights the broader principle that tax authorities must collect dues promptly, as delayed collections could harm public interest.
By: Kpost
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