Court of Appeal to Rule in September on Najib and Son’s Bid to Delay Bankruptcy Proceedings
PUTRAJAYA, July 4 — Malaysia’s Court of Appeal will deliver its decision on September 4 on an application by former prime minister Datuk Seri Najib Razak and his son, Datuk Mohd Nazifuddin Najib, seeking to postpone bankruptcy proceedings initiated over unpaid income tax assessments.
The appeal follows a High Court ruling in November last year that dismissed their request to stay the bankruptcy actions, with the court finding that no sufficient grounds had been established to justify delaying the proceedings.
A three-member Court of Appeal bench comprising Datuk Dr Alwi Abdul Wahab, Datuk Dr Shahnaz Sulaiman and Datuk Ong Chee Kwan fixed the decision date after hearing submissions from lawyers representing both the appellants and the Inland Revenue Board (LHDN).
The bankruptcy actions stem from tax claims brought by LHDN against Najib and Mohd Nazifuddin over substantial outstanding income tax liabilities.
In Najib’s case, LHDN filed a bankruptcy notice in April 2021 after alleging that the former prime minister had failed to settle income tax arrears, interest and related sums amounting to approximately RM1.738 billion, including court-awarded costs.
Separately, Mohd Nazifuddin received a bankruptcy notice later that same month in relation to an alleged RM37.6 million in unpaid income tax.
The pair subsequently sought to suspend the bankruptcy proceedings while pursuing separate legal avenues challenging the underlying tax assessments.
Their application, however, was rejected by the High Court on November 17, 2025, prompting the present appeal.
During proceedings before the Court of Appeal, counsel Tan Sri Muhammad Shafee Abdullah argued that Najib had already paid income tax and questioned the legal basis for the additional assessment imposed by the tax authority.
He submitted that the disputed assessment effectively treated Najib as having failed to declare approximately RM8 billion in income.
According to Shafee, the disputed sums related to funds that Najib had maintained were donations from Saudi Arabia rather than taxable income.
He contended that such donations should not have formed part of the taxable assessment and argued that the Inland Revenue Board had failed to adequately explain the methodology used in calculating the additional tax liability.
Shafee urged the appellate court to suspend the bankruptcy proceedings pending the outcome of proceedings before the Special Commissioners of Income Tax (SCIT), where Najib intends to continue challenging the disputed assessment.
Representing LHDN, senior counsel Norhisham Ahmad opposed the application.
While acknowledging that the amount involved was significant, he argued that the size of the tax assessment alone did not constitute sufficient legal grounds for postponing bankruptcy proceedings.
Norhisham submitted that existing tax legislation requires taxpayers to settle assessed liabilities before pursuing challenges through the available legal mechanisms.
He maintained that the statutory framework does not provide an automatic basis for delaying enforcement simply because the taxpayer disputes the assessment.
The tax dispute has been the subject of lengthy litigation spanning several years.
In 2020, separate High Court decisions granted summary judgment in favour of LHDN against both Najib and Mohd Nazifuddin, allowing the tax authority to recover the disputed income tax without proceeding to a full trial.
Those judgments covered tax assessments issued for multiple years between 2011 and 2017.
The legal position was further reinforced in October 2023, when the Federal Court dismissed appeals filed by Najib and his son seeking to overturn the High Court decisions, leaving the tax judgments in place.
The Court of Appeal’s ruling scheduled for September will determine whether bankruptcy proceedings may continue immediately or be temporarily suspended while further tax-related proceedings remain before the Special Commissioners of Income Tax.
