SHAH ALAM (April 22): The High Court on Tuesday granted leave (permission) to Toh Puan Na'imah Abdul Khalid to challenge a RM313.82 million additional tax imposed on her by the Inland Revenue Board (IRB).

Judge Dr Shahnaz Sulaiman ruled that Na'imah, the wife of the late former finance minister Tun Daim Zainuddin, did not make a frivolous or vexatious application in her judicial review to challenge the additional tax.

"This court is satisfied that this matter relates to questions of law. It is not a frivolous and vexatious application.

"This court is satisfied that leave (permission) should be granted as the application is not frivolous or vexatious, and the matter should be heard further at the substantive stage. Leave is allowed," Shahnaz said in her ruling.

In judicial review challenges against the authorities, leave must be obtained for the merits of the challenge to be heard.

Na'imah challenged the extra tax imposed on her for 2018, after the IRB claimed she failed to report income from three properties worth RM700.57 million. These properties are Nantasket Beach Resort in Hull, Chauncy Place in Boston, and Hotel Buckminster and Annex in Boston, Massachusetts.

She claimed that the three foreign assets were purchased by her and Daim more than 30 years ago, whereas the Income Tax Act (ITA) only requires taxpayers to retain documents up to seven years.

In her affidavit for the judicial review, Na’imah referred to Section 3 of the ITA, which states that income tax is only charged on income earned in Malaysia or received in Malaysia from abroad. She used this to argue that taxes in Malaysia are based on the source of the income.

Na’imah further claimed that the issue of the increase in share capital (raised in January last year) had already been brought up previously, and Daim had entered a settlement with the IRB, making the IRB's decision to revisit it irrational and unreasonable.

Na’imah also claimed that she and her late husband had applied for joint taxation, and since Daim had already paid the additional tax, the extra taxes imposed on her amounted to double taxation.

She alleged that she was being targeted by a collaboration between the Malaysian Anti-Corruption Commission and the IRB to create problems for her and damage her reputation.

Na’imah added that she had always acted in good faith, fully cooperated, and was transparent in handling her financial and tax matters.

Federal counsel Sheryn Yong of the Attorney General's Chambers objected to Na’imah’s leave, saying she should instead take the matter to the Special Commissioner of Income Tax.

Yong argued that there were no special circumstances to justify the court hearing her case, and called her challenge frivolous and without merit.

Na’imah’s counsel S Saravana Kumar along with Dharshini Sharma of Messrs Rosli Dahlan Saravana Partnership however argued that the judicial review should still be allowed even if another remedy exists, as it does not automatically block the court from granting leave.

Saravana Kumar also said the case involves legal questions that should be heard in court, especially since the assets in question are foreign and not from income earned in Malaysia.

At first, Shahnaz told Na’imah to pay the amount, and denied her request for a stay. However, Na’imah later got a stay after appealing to the Court of Appeal.

Na’imah is asking the court to cancel the IRB’s order from August 13 last year, which required her to pay additional taxes. She argues that the order is illegal, beyond the IRB’s powers, and unreasonable.

She also wants the court to declare that the ITA is based on territorial taxation, meaning it only applies to income earned in or received in Malaysia. She argues that she shouldn't have to provide information on foreign assets if there’s no income received in Malaysia.

Additionally, she wants the court to clarify that the ITA is meant to impose tax — not to require people to explain where they got the money for their investments. Finally, she is seeking a declaration that the IRB had no valid reason to claim her foreign assets were acquired in 2018.

Read also:
April 22 decision for Na’imah to challenge IRB’s imposition of RM314 mil additional tax on her
Daim’s wife Na’imah obtains temporary stay on payment of RM313.82m additional tax, pending hearing of her appeal against High Court’s rejection of stay request
Daim's wife Na’imah seeks to set aside RM314m tax assessment