RM9.5mil received by Shafee from Najib not a loan, court told

 

Shafee Abdullah at the Kuala Lumpur High Court to attend his trial on income tax charges today. (Bernama pic)

KUALA LUMPUR: The High Court here heard today that the two cheques totalling RM9.5 million which lawyer Shafee Abdullah received from Najib Razak were not a loan.

Instead, former Inland Revenue Board (LHDN) tax officer Syed Nasrul Fahmi Syed Mohamad said that based on documents and investigation findings, the cheques were advance payments for legal services rendered by the lawyer to the former prime minister.

“To say that it is a loan is a mistake and can prompt the public to change their invoices to loans to avoid paying taxes.”

The seventh prosecution witness said this during cross-examination by Harvinderjit Singh in the trial of Shafee, who was charged with receiving RM9.5 million from Najib, which were proceeds from unlawful activities and submitting incorrect tax returns to LHDN.

Earlier, Harvinderjit showed the witness the letter between Shafee and Najib, which stated that the lawyer’s legal fees would only be determined after all cases related to election petitions were concluded.

Based on the letter dated Sept 12, 2013, the RM9.5 million was the legal fees charged by Messrs Shafee & Co mostly for 46 cases involving election petitions where Shafee acted for Umno and Barisan Nasional (BN).

The letter also stated that Shafee had requested Najib to issue a cheque for RM4.3 million to him as advance payment or a loan for his immediate use before the final bill is issued, and then asked for another cheque for RM5.2 million for the same purpose.

The two cheques totalling RM9.5 million deposited into the lawyer’s personal bank account were the discounted amount from the original legal fees of RM11.5 million.

Syed Nasrul agreed with Harvinderjit’s suggestion that if the RM9.5 million received by Shafee were a loan, it need not be declared as income to LHDN.

However, since it was not a loan, he said, Shafee was considered to have failed to declare the income of RM9.5 million to LHDN for the assessment years of 2013 and 2014.

“Tan Sri Shafee failed to submit the (income tax return) form in accordance with Section 77 (1) of the Income Tax Act (ITA) 1967. The form was submitted about nine months after the deadline of June 30, 2014, and he only declared a business income of RM3,173,007 and paid tax of RM264,720 for the assessment year 2013,” he said.

“For the assessment year 2014, he declared a business income of RM3,391,108 and paid tax of RM319,959,” he said.

Shafee has pleaded not guilty to two charges of receiving RM9.5 million that were proceeds from unlawful activities through two cheques issued by Najib which were deposited into his CIMB Bank account.

He was also charged with two counts of engaging in transactions resulting from illegal activities, namely submitting incorrect tax returns, which is in violation of paragraph 113 (1) (a) of the Income Tax Act 1967 for the financial years ending Dec 31, 2013, and Dec 31, 2014. - FMT