Taxman to relook RM2.6 billion donation to Najib

PHOTO: The Star/Asia News Network

KUALA LUMPUR - The Inland Revenue Board (IRB) will investigate the RM2.6bil (S$871 million) received by former prime minister Datuk Seri Najib Tun Razak, as well as cash and other valuable items recently seized from his residence and other premises.

IRB chief executive officer Datuk Seri Sabin Samitah said this follows ongoing investigations into all issues related to 1Malaysia Deve­lopment Bhd (1MDB).

“The tax treatment of the RM2.6bil that was initially decided on Feb 16, 2016, is now subject to further examination,” he said in a statement.

“In the process of ascertaining the true nature of the payment, the IRB will work closely with all agencies and newly formed task forces involved in the investigation.”

With regard to the seizure of cash and valuables, he said a notice under Income Tax Act 1967 would be issued to individuals connected to the items seized.

“The purpose of the notice is to ascertain whether sufficient disclosure of income has been made to the IRB that commensurate with the assets (cash and valuables) owned by a particular individual,” he said.

In the event of unexplained wealth, he said additional tax would be raised together with penalty of a maximum of double the amount of tax under-declared.

“Failure by a person to comply with the notice within the specified time is an offence and can be prosecuted under the Income Tax Act 1967,” he added.

Sabin said agencies previously tasked with investigating the RM2.6bil in 2016 found the amount received to be a donation payment, voluntary in nature and as such had no income characteristics.

Pursuant to the general principles of taxation with respect to such voluntary payment, he said it was not an income, which is subject to tax under the Income Tax Act 1967.

He added that a voluntary payment may change in character and be subject to tax if it is given repetitiously, as consideration for services rendered, in return for any benefit of any kind or the amount is used in a business activity to sustain business operations.

“It should be highlighted that voluntary payments received by charitable institutions which have these characteristics are subject to tax unless the institution is exempted under the Income Tax Act 1967,” he said.

Malaysian police search places linked to ousted PM Najib

  • The cash and items seized from the six residences linked to Datuk Seri Najib Tun Razak amounted to between RM900 million (S$304 million) and RM1.1 billion, say the police.
  • He said that more than 12,000 pieces of jewellery - comprising 2,200 rings, 1,400 necklaces, 2,100 bracelets, 2,800 pairs of earrings,1,600 brooches and 14 tiaras were seized.
  • He added that this was the biggest seizure in Malaysian history.
  • Najib's wife Rosmah Mansor arrived at the headquarters of the Malaysian Anti-Corruption Commission (MACC) to have her statement recorded in connection with a suspicious transfer of about $10.6 million (S$14.2 million) from the former 1MDB unit SRC International.
  • The sum is just a fraction of the billions of dollars allegedly siphoned from 1MDB, the state fund that Najib set up, in a scandal that dogged the last three years of his near-decade-long rule and was a key reason why he was voted out in a May 9 election.
  • M. Puravalen, a lawyer acting for Najib and Rosmah in connection with the SRC investigations, told Reuters on Tuesday he had "ceased acting" for Najib and Rosmah.
  • He said a second lawyer, Yusof Zainal Abideen, had also quit.
  • Puravalen, Abideen and other members of their legal team were reported to have walked out because they failed to reach common ground with Najib on several issues.
  • Najib has already made a series of statements to anti-graft investigators
  • but attention has shifted to his wife after police discovered hundreds of luxury handbags and a stash of jewelry and cash during raids on apartments linked to Najib and his family.
  • Malaysian police have seized 284 boxes filled with designer handbags, watches, jewellery and cash in various currencies from three luxury condominiums.
  • Comm Amar said the designer handbags were of various brands including Louis Vuitton and Birkin bags from Hermes.
  • He added that it was impossible for police to estimate the value of the items seized because there were just too many items and cash seized.
  • He also said that the apartment was not owned by Najib but a "Tan Sri".
  • Federal Commercial Crime Investigation Department (CCID) director Comm Datuk Seri Amar Singh, who led the raids at Pavilion Residences here said this was part of its investigations into 1MDB.
  • This follows a police check of six locations linked to former prime minister Datuk Seri Najib Tun Razak here and in Putrajaya, including the Prime Minister's Office, his official residence as well as four other residences.
  • When asked whether Najib would be arrested, he said: "There is no indication that they (the police) will do it."
  • He said Najib and his family were cooperative with police. "They (the police) also acted professionally," he said.