Advocates for Changes to the Tax Dispute System Justified by Wee

Advocates for Changes to the Tax Dispute System Justified by Wee

Headline: Ongoing Tax Dispute Between TNB and LHDN Threatens Malaysia's Public Investment Funds

The ongoing tax dispute between Tenaga Nasional Bhd (TNB) and the Inland Revenue Board (LHDN) has been a topic of significant political discussion in Malaysia, with the future of the country's public savings funds hanging in the balance.

The dispute, which dates back to a Federal Court ruling on July 2, 2025, has seen TNB face a RM5.05 billion tax bill due to the court's determination that the company should have applied under Schedule 7B of the Income Tax Act 1967 as a utility company, rather than under Schedule 7A as a manufacturer. The ruling also includes additional penalties, bringing the total liability to RM8.32 billion[1][2][3][4].

TNB has responded by submitting a new application under Schedule 7B in an attempt to reduce or nullify the tax impact, and is currently evaluating legal options to address the notices from LHDN[1]. It is worth noting that the court acknowledged TNB acted in good faith over decades by applying Schedule 7A, and the dispute centres on interpretation rather than wrongdoing or fraud[3][4].

The implications of this dispute are far-reaching, with TNB being majority-owned by entities managing Malaysia's public savings funds, including Amanah Saham Nasional Berhad, Employees Provident Fund (EPF), Retirement Fund Inc (KWAP), Tabung Haji, and Permodalan Nasional Berhad (PNB). The large tax penalties could lead to financial losses for these funds, potentially affecting the savings of Malaysian citizens[2][3].

Political figures, such as MCA president Datuk Seri Dr Wee Ka Siong, have called on the government and Finance Minister to intervene to protect the people's savings by approving TNB's tax relief under the appropriate schedule or waiving disputed amounts. Wee has also urged reforms for the tax appeals system to ensure LHDN's independence and avoid similar disputes in the future[2][3][4].

In the lower house, the dispute has led to a verbal exchange between Wee and MP Chong, with Wee accusing Chong of misleading the house when Chong claimed the "daylight robbery" remark was inaccurate. Chong, on the other hand, has accused Wee of misleading the house with the same remark[4].

It is crucial to note that the Federal Court's ruling states that TNB should have been considered a utility company under Schedule 7B of the ITA, not eligible for reinvestment allowances[4]. However, Wee has stated that no one is disputing this ruling[4].

If the government enforces the court ruling, the RM5 billion would go into its coffers. The resolution of this dispute is of utmost importance to mitigate the risks to Malaysia’s public investment funds and ensure the protection of the people's savings.

[1] The Star Online. (2025, July 3). TNB to challenge tax ruling in court. Retrieved from https://www.thestar.com.my/business/business-news/2025/07/03/tnb-to-challenge-tax-ruling-in-court

[2] Malay Mail. (2025, July 4). MCA urges government to waive TNB's disputed tax bill to protect rakyat's savings. Retrieved from https://www.malaymail.com/news/malaysia/2025/07/04/mca-urges-government-to-waive-tnbs-disputed-tax-bill-to-protect-rakyats-savings/1932972

[3] Bernama. (2025, July 2). Federal Court rules TNB ineligible for reinvestment allowances. Retrieved from https://www.bernama.com/en/business/news.php?id=1975478

[4] New Straits Times. (2025, July 5). Wee, Chong lock horns over TNB's tax dispute. Retrieved from https://www.nst.com.my/news/nation/2025/07/740248/wee-chong-lock-horns-over-tnbs-tax-dispute

1. The tax dispute between TNB and LHDN, a matter of federal law, has sparked significant discussion in the government and parliament, particularly regarding the protection of Malaysia's public investment funds.
2. As TNB is majority-owned by entities managing the public savings funds such as Amanah Saham Nasional Berhad, EPF, KWAP, Tabung Haji, and PNB, the large tax penalties could potentially lead to financial losses for these funds, impacting the savings of Malaysian citizens.
3. Political figures, like DAP's MCA president Datuk Seri Dr Wee Ka Siong, have advocated for government intervention to protect the people's savings, suggesting tax relief for TNB or waiving disputed amounts.
4. The dispute has also led to debates in the parliament, with political figures like Wee and MP Chong engaging in verbal exchanges over the matter.
5. Financial implications aside, the ongoing tax dispute raises questions about the independence of LHDN and the effectiveness of the tax appeals system, issues that have been brought to the forefront of Malaysia's general-news and political discussions.

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