Malaysia’s former prime minister Najib Razak and his son, Mohd Nazifuddin Najib, have been ordered to pay a staggering US$407 million in taxes after a Malaysian High Court dismissed their appeal to stay bankruptcy proceedings. The case stems from their failure to settle tax arrears amounting to 1.69 billion ringgit (US$407 million) for Najib and 37.6 million ringgit for Nazifuddin.
Court Ruling and Bankruptcy Proceedings
On Monday, Judicial Commissioner Suhendran Sockanathan dismissed the father and son’s appeal to halt bankruptcy proceedings. The court’s decision comes after Najib and Nazifuddin failed to pay their tax debts, which were assessed by Malaysia’s Inland Revenue Board (IRB). Suhendran stated there was no reason to grant a stay, emphasizing that tax assessments are handled by the Special Commissioners of Income Tax, and not by the court.
The court’s role, according to Suhendran, is only to facilitate tax collection. The judge referred to the “pay now, dispute later” principle, which is designed to ensure that taxes are collected efficiently while disputes are resolved separately.
Background on Tax Arrears and Legal Battle
This tax issue dates back to the period between 2011 and 2017, with the government seeking to recover unpaid taxes. In 2020, two separate High Court decisions allowed the revenue board’s applications for a summary judgment against Najib and Nazifuddin. The courts ruled in favor of the revenue board, determining that the unpaid taxes amounted to 1.69 billion ringgit for Najib and 37.6 million ringgit for Nazifuddin.
In response, the government filed a bankruptcy notice in the Kuala Lumpur High Court in February 2021, and a final ruling by the Federal Court on October 16, 2023, confirmed that Najib and his son must pay the arrears.
Political Context and Impact
The ongoing legal challenges for Najib Razak and his son add another chapter to the legacy of the infamous 1MDB scandal, which has had a lasting impact on Malaysia’s political landscape. As one of the key figures in the scandal, Najib’s financial troubles continue to resonate in the public sphere. Despite his legal challenges, Najib remains a polarizing figure in Malaysian politics.
Next Steps and Potential Consequences
With the court’s ruling, Najib and Nazifuddin now face bankruptcy unless they settle the outstanding tax arrears. This could further complicate their financial and political futures. The legal process is likely to continue as the former prime minister and his son weigh their options for addressing their significant debts.
