THE Court of Appeal has fixed Sept 4 to deliver its decision on an appeal by former prime minister Datuk Seri Najib Razak and his son, Datuk Mohd Nazifuddin Najib, seeking to stay bankruptcy proceedings over unpaid tax assessments amounting to more than RM1.72 billion.
A three-member panel comprising Justice Dr Alwi Abdul Wahab, Justice Dr Shahnaz Sulaiman and Justice Ong Chee Kwan reserved judgment after hearing submissions from both parties on Friday.
“We need to go through the submissions,” Justice Alwi told The Star.
Najib and Nazifuddin are appealing against the High Court's Nov 17, 2025 decision dismissing their application to suspend bankruptcy proceedings initiated by the Inland Revenue Board (LHDN).
The proceedings relate to alleged tax arrears of RM1.69 billion owed by Najib and RM37.6 million owed by Nazifuddin.
Representing Najib, Tan Sri Muhammad Shafee Abdullah argued that the RM1.69 billion assessment arose from an additional tax assessment despite his client having already paid his income tax.
He contended that the assessment was based on funds donated by the Saudi royal family, which Najib later returned after the general election, and argued that the donation should not have been treated as taxable income.
“We have raised this since the beginning but they (the LHDN) never replied to us on how they computed (the additional tax assessment),” he said.
Shafee urged the appellate court to stay the bankruptcy proceedings pending Najib's challenge before the Special Commissioners of Income Tax (SCIT), where the tax assessment itself is being disputed.
“If he is declared bankrupt, he will have problems engaging counsel and he has to make payment through other sources,” he said.
He further argued that the assessment was “oppressive” and that refusing a stay would amount to a denial of natural justice.
Appearing for LHDN, senior revenue counsel Norhisham Ahmad submitted that the size of the tax assessment alone did not constitute special circumstances warranting a stay of bankruptcy proceedings.
“It is in the law that he has to pay first and dispute later,” he said.
In 2020, the High Court granted summary judgment in favour of LHDN to recover RM1.69 billion in tax arrears from Najib and RM37.6 million from Nazifuddin for the assessment years between 2011 and 2017.
The Federal Court subsequently upheld those decisions on Oct 16, 2023, dismissing separate appeals by Najib and Nazifuddin and affirming that both were liable to settle the tax arrears.
The tax assessments remain the subject of separate proceedings before the Special Commissioners of Income Tax, with Najib's hearing scheduled for September and Nazifuddin's in October. - July 3, 2026
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