The Court of Appeal has allowed former Prime Minister Najib Razak and his son Nazifuddin Mohd Najib to stay bankruptcy proceedings initiated by the Inland Revenue Board (IRB). The decision came on September 4, 2026, pending disposal of their tax appeal before the Special Commissioners of Income Tax (SCIT) [1, 2, 3, 4, 5, 6, 7, 8].

The IRB had issued bankruptcy notices due to unpaid tax assessments amounting to approximately RM1.69 billion for Najib and RM37.6 million for Nazifuddin, covering assessment years from 2011 to 2017 [1, 5, 7, 8]. The Court of Appeal panel, chaired by Datuk Dr Alwi Abdul Wahab alongside Datuk Dr Shahnaz Sulaiman and Datuk Ong Chee Kwan, unanimously set aside the High Court’s November 17, 2025 ruling that had dismissed Najib and Nazifuddin’s earlier applications to stay bankruptcy proceedings [1, 2, 3, 4, 5, 6, 7, 8].

The court found serious legal issues warranting the stay, including potential double taxation and statutory time-bar concerns. It noted the irreversible harm bankruptcy causes and clarified that the "pay first, dispute later" rule under the Income Tax Act 1967 does not bar granting a stay in exceptional circumstances. Justice Alwipa Abdul Wahab said, "The learned Judicial Commissioner’s equation of irreparable harm with mere monetary loss was a misdirection" and stressed the court’s power to intervene where justice requires [1, 2, 3, 4, 6, 8].

Additionally, the court highlighted an overlap between the funds subject to the additional tax assessments and monies involved in criminal charges against Najib, raising further complexity [6, 8]. It awarded RM30,000 in costs to each Najib and Nazifuddin [2, 3, 4].

Justice Wahab explained, "Section 111 provides for a refund of excess tax already paid if Najib’s and Mohd Nazifuddin’s appeals before the Special Commissioners of Income Tax (SCIT) concerning their tax liabilities succeed. We agree with the appellants’ submission that the judicial commissioner’s reasoning was confined to the question of recovering the money. It does not and cannot address the distinct and irreversible consequences of a bankruptcy declaration" [8].

Najib and Nazifuddin’s bankruptcy proceedings will remain on hold until the SCIT completes its review of their tax appeal.