DATUK Seri Najib Razak and his son Datuk Nazifuddin have won their appeal to temporarily halt bankruptcy proceedings linked to RM1.7 bil in unpaid tax claims.
According to the New Straits Times, a three-member Court of Appeal panel, led by Datuk Dr Alwi Abdul Wahab, unanimously allowed the applications today.
The court found that allowing the bankruptcy proceedings to continue could potentially prejudice Najib’s ongoing appeal against the tax matter, while also interfering with other criminal and civil proceedings involving the former prime minister.
The panel, which also included Datuk Dr Shahnaz Sulaiman and Datuk Ong Chee Kwan, subsequently overturned the High Court’s Nov 17, 2025 decision, which had rejected Najib and Nazifuddin’s applications for a stay.
In delivering the unanimous decision, Alwi said Najib’s appeal before the Special Commissioners of Income Tax (SCIT) raised “serious, substantial and, in part, public issues” that required determination.
“The lower court brushed aside these issues and failed to address or weigh them in deciding whether sufficient grounds for a stay had been established.
The Court of Appeal also raised concerns over the Inland Revenue Board’s (IRB) handling of Najib’s tax assessments, particularly their withdrawal and subsequent reissuance in March 2019.
Justice Datuk Dr Alwi Abdul Wahab said the sequence of events had raised questions about whether the IRB’s actions were proper and legally valid.
He noted that there were also significant issues surrounding the calculation of the RM1.69 billion tax assessment, including how refunded donations and other monies were accounted for.
According to Alwi, the IRB’s position was that such matters should ultimately be decided by the SCIT.
However, he pointed out that the tax authority had continued pursuing the bankruptcy proceedings while maintaining that the disputed issues should be determined by the SCIT.
The court also identified what it described as a novel issue arising from the overlap between funds subjected to the additional tax assessment and those forming the subject matter of criminal charges against Najib.
Alwi said this raised a novel question as to whether proceeds alleged to be unlawful could, at the same time, be subjected to taxation as legitimate income.
The court also took judicial notice of the numerous criminal and civil proceedings involving the former Pekan member of parliament.
“The issuance of a bankruptcy order would automatically stay those proceedings, thereby disrupting the administration of justice and delaying litigation of public importance.”
Alwi also said that the “pay first, dispute later” mechanism under the Income Tax Act should not be treated as an absolute bar to the court’s discretion.
As both sides had agreed that the outcome of Najib’s appeal would bind Nazifuddin’s related appeal, the court also allowed the latter’s appeal.
The court awarded RM30,000 in costs for each appeal.
In 2020, the High Court entered summary judgments ordering Najib and Nazifuddin to pay RM1.69 bil and RM37.6 mil respectively in unpaid taxes for assessment years between 2011 and 2017.
The Federal Court upheld the judgments on Oct 16, 2023, ruling that taxes assessed under the Income Tax Act remained payable notwithstanding any pending appeal.
The IRB subsequently commenced bankruptcy proceedings after the pair failed to settle the outstanding tax liabilities.—Sept 4, 2026
Main image: scoop.my
