The Inland Revenue Board, which has filed a suit to recover RM1.69 billion in additional taxes from Najib Razak, wants the ex-prime minister to pay all dues before contesting the matter in court.
Najib’s lawyer Muhammad Farhan Muhammad Shafee said this was unfortunate as the case of “pay now and talk later” would adversely impact his client.
“The amount to the tune of RM1.69 billion will effectively bankrupt my client and disqualify him as an MP,” he told reporters after attending a case management via e-review.
Najib has been Pekan MP since 1976, with the exception of the years between 1982 and 1986 when he was Peramu Jaya assemblyman.
Farhan said lawyers appearing for the IRB had indicated to the court that they were planning to file an application for summary judgement, notwithstanding that there was an appeal on the tax assessment.
He said Najib would be filing a stay of proceedings pending the resolution of the assessment.
The next case management is fixed for Aug 30.
LHDN filed the suit on June 25, asking Najib to pay RM1,692,872,924.83 allegedly owed between 2011 and 2017.
IRB served the writ of summons on Najib as the sole defendant on July 4.
The suit was initiated after Najib failed to act on the IRB’s initial demand in March for additional tax assessments of RM1.47 billion.
This resulted in a 10% hike of RM147 million in April and another compounded 5% hike of RM80 million in May.
The 10% increase was imposed under Section 103 of the Income Tax Act after Najib failed to pay the initial RM1.47 billion within 30 days of the date the assessment notice was issued.
The former prime minister also failed to settle the renewed sum within 60 days under the same provision, which resulted in the compounded 5% hike.
Source : FMT
A bankruptcy declaration, if approved, will disqualify Najib from being a member of Parliament, in accordance with Article 48 of the Federal Constitution.
Najib Razak has accused the authorities of seeking to derail his political career by taking bankruptcy action against him. He said it was linked to Umno’s decision not to work with PPBM at the next general election.
In a lengthy Facebook post, the former prime minister said that the bankruptcy action would result in him being disqualified as MP for Pekan, paving the way for a by-election.
“I won’t be eligible to contest in the party polls and the election.”
Najib also said he would lose all his savings which he is currently surviving on and to pay his lawyer’s fee.
He said the notice would also mean his belongings and money that were seized for his corruption trial would not be returned.
Najib went on to say that apart from Umno’s recent decision on working with PPBM made at the general assembly, he was also certain the bankruptcy notice had to do with a recent survey by Utusan TV which revealed he was the front runner for the prime ministerial post.
However, despite this he said he would not be cowed by those who are abusing their powers to persecute him.
“I will still continue to speak up for Malaysians.”
Yesterday, the Inland Revenue Board filed a bankruptcy notice against Najib for failing to pay RM1.69 billion in additional tax arrears for 2011 to 2017.
Najib has disputed the tax assessment, saying that he was being assessed tax on a RM2 billion donation, most of which had been returned.
What You Need To Know About Bankruptcy In Malaysia
What is bankruptcy?
It is a process where a debtor (a person who owes money to a creditor) is declared bankrupt following a court order known as Adjudication Order from the High Court against him or her. The following criteria applies when declaring a person bankrupt:
Unable to pay debts which amount to at least RM30,000.
Debt involved (which is at least RM30,000) must be ascertainable which means the debt amount is in a liquidated sum.
There have been a period of six months default for the debt before a person can be declared bankrupt.
The individual must have resided in Malaysia for at least one year.
However, do take note that government is considering of making amendments to the Bankruptcy Act 1967. The proposed changes are to increase the maximum threshold of RM30,000 to RM50,000 before a person is declared bankrupt. Aside from that, the government is also looking to reduce the number of years before a person who has been declared bankrupt can apply for a court discharged.
Currently, a person declared bankrupt can only do so after 5 years, but the proposed change is to reduce it to 3 years. But there is no confirmation when the changes will take place.
Did you know that you can be declared bankrupt without your knowledge? A person can be declared a bankrupt without their knowledge as per below:
Legal documents sent to old address.
Bankruptcy was served by a substituted service procedure.
Does not turn up to court.
Does not accept or open any legal documents sent.
Substituted service is bankruptcy served via an advertisement in a local newspaper or posted on the notice board in court. In such cases a bankrupt may not realize that a bankruptcy proceeding has been initiated against them.
A substituted service is done when an individual cannot be located due to change of address. You can conduct a bankruptcy search to check your status at Malaysia’s Department of Insolvency’s headquarters in Putrajaya for a fee of RM10.
What happens when a person is declared bankrupt?
Being declared a bankrupt means an individual will have plenty of restrictions imposed upon them. Below are what will happen once a person is declared bankrupt:
- Appointed A DGI
Once declared a bankrupt, a person will be assigned to the Director General of Insolvency (DGI). The DGI will administer all of the individual’s assets and manage it to repay the outstanding debts. So once declared bankrupt, a person’s assets will all be put under the administration of the DGI.
- Travel Ban
An individual who has been declared bankrupt will be unable to travel out of the country without written permission from the DGI or before obtaining a court order which allows the individual to travel overseas.
- Limited Credit Line
Existing bank accounts will be deactivated and a bankrupt will be barred from withdrawing any money from their existing account. Aside from that, a bankrupt is not allowed to spend more than RM1,000 on their credit card or obtain credit more than RM1,000 from any creditor.
- Assets Taken Away
Once declared a bankrupt, all of the assets of the individual will be managed by the DGI. So for example an individual’s house and cars will be taken over by the DGI who will then manage it by reselling it to repay outstanding debts.
- Employment Restricted
A bankrupt will not be able to work in certain professions which have restrictions imposed by their professional associations or licensing authorities. Examples of the profession a bankrupt cannot be employed as are:
Aside from that, once declared bankrupt an individual may not act as a director of a company. A bankrupt is also not allowed to own a business or be part of a business ownership, so no entrepreneurship is allowed once an individual has been declared a bankrupt.