Penang High Court allows RM1b tax claim against Jho Low in summary judgment

Malay Mail
Malay Mail

GEORGE TOWN, Oct 18 ― The Penang High Court has allowed the Income Revenue Board (IRB) to make a tax claim for RM1,053,972,936.58 with interests from Low Taek Jho in a summary judgment made yesterday.

According to the summary judgment sighted by Malay Mail, Judicial Commissioner Kenneth St James allowed IRB's application to enter judgement for the sum with interest at five per cent per annum from the date of the judgment with costs of RM15,000.

“In my judgment, for all the reasons set out earlier, I find that there is neither a triable issue nor 'some other reason' for there to be a trial to determine this statutory tax claim,” he said in his 60-page judgment.

The IRB, the plaintiff, had submitted a tax claim against the broker known as Jho Low for failing to submit tax returns for the years of assessment 2013 and 2014.

The IRB had issued notices of assessment to Low for the sums of RM202,575,166.56 for 2013 and RM755,582,048.52 for 2014.

IRB claimed that Low failed to pay the tax assessed and as a consequence, a 10 per cent increase was imposed on the assessed tax amount so the eventual total tax payable for 2013 and 2014 was RM1,053,972,936.58 which Low again failed to pay.

Low, through his lawyers, denied that he is liable to pay the tax.

He had submitted nine defences against the tax claim, one of which was the 1MDB suit against him.

He had questioned whether the chargeable income in the tax claim is the same money as the money claimed by the 1MDB suit.

He claimed that if it is, then the IRB is taking an inconsistent stand where in the 1MDB suit, the money claimed is trust money while in the tax claim, the government claimed the money is chargeable income for which Low must pay the tax assessed.

“Even though 1MDB is owned by the government of Malaysia, through the Minister of Finance (Incorporated), 1MDB is not the government of Malaysia (the IRB). 1MDB and IRB are different entities,” St James ruled in his judgment.

He pointed out that in the 1MDB suit against Low and five other defendants, the claims against the defendant were under the causes of action of fraud, improper receipt of all five plaintiffs' monies (not just 1MDB's money), fraudulent misappropriation, unjust enrichment and conspiracy to injure or defraud.

1MDB together with four other plaintiffs had filed a suit against Low and five other individuals claiming that the defendants had received approximately USD3.78 billion between 2009 and 2014 and that the sum does not belong to the defendant but is held by him as a constructive trustee.

“In this tax claim, however, the IRB sues the defendant for not paying his assessed tax, under the statutory regime governed by the act,” he said.

He said the monies claimed in the 1MDB suit are unrelated to this statutory claim for tax as a debt due to the IRB.

“I hold that there is no good reason for me to embark on an investigation to determine whether the money claimed in the 1MDB suit is the same money as the tax money claimed here,” he said.

Therefore, he found Low's argument on the issue to be speculative, remote and unsustainable.

He also contends that there was no evidence that points to, or compels an inference that there is a connection between the money claimed in the 1MDB suit and Low's chargeable income in this tax claim.

“The defendant presents no evidence nor condescends to particulars that the money claimed in the 1MDB suit is the same money as the chargeable income in this tax claim,” he said.

As such, he found the defendant's argument to be a bare allegation.

On the defendant's argument that the documentary evidence is in IRB's possession and control, he said the defendant is allowed to file for interrogatories and the discovery of documents.

“The defendant did not file for interrogatories and discovery,” he said.

The tax claim was filed in January 2021 and the application for summary judgment was filed in April 2021. The 1MDB suit was filed in May 2021.

“Between May 2021, when the 1MDB suit was filed, and the first hearing of this application on August 22, 2022, the defendant could have filed for interrogatories and discovery but he did not,” he said.

St James adds that if he were to accept this argument for the tax claim to go to trial, this means the other five defendants in the 1MDB suit will use the same ground to deflect paying their taxes.

Low had also submitted defences that he did not have bank accounts or conduct business in Malaysia in 2013 and 2014 and that he had informed IRB that he “would be moving out of Malaysia to work abroad for the long term” and he would “no longer be a Malaysian tax resident.”

St James said this is a straightforward statutory tax claim, the defendant did not submit tax returns for the relevant years, the IRB issued assessments to him which he did not respond to, he did not challenge the service of the assessments, he failed to pay the total tax amount assessed and he did not appeal to the special commissioners about the merits of the assessment.

“I am not satisfied that the fact that the 1MDB suit is brought against the defendant create a circumstance that there is some other reason to warrant a trial,” he said.

As for the defendant's arguments that the tax claim by IRB was an abuse of process, he said the allegation that filing the tax claim is an abuse of the process is a challenge against the propriety of the IRB's tax assessment.