High Court quashes MOF’s rejection of Baleh Hydro’s RM10.9 bil tax incentive claim

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KUCHING, Aug 6: The Kuala Lumpur High Court has on Aug 4 granted Baleh Hydro Power Generation Sdn Bhd’s judicial review application to challenge the Finance Ministry’s (MOF) decision of rejecting a RM10.9 billion investment tax allowance claim.

Baleh Hydro, a subsidiary of Sarawak Energy Berhad (SEB), which was appointed to construct a hydroelectric power plant in Kapit, had applied to MOF to claim the investment tax allowance, a type of tax incentive granted based on the capital expenditure a company incurs on approved projects.

Baleh Hydro’s application was rejected by the then Finance Minister Lim Guan Eng, dated Oct 2, 2019, without any reasons provided, although Baleh Hydro claimed its application had met all required conditions.



Lim, in his affirmed affidavit in response to Baleh Hydro’s claim, said the company’s claim was rejected on the basis that the hydroelectric project was not of national importance.

Under the Income Tax Act 1967, Senior Federal counsel Shamsul Bolhassan told the court that Lim was not required to provide reasons for rejecting the tax incentive application.

Baleh Hydro’s counsel S Saravana Kumar submitted that the Minister’s decision should be deemed erroneous since the company had met all the required conditions for the tax incentive.

High Court Judge Datuk Wan Ahmad Farid Wan Salleh accepted Saravana Kumar’s submission and allowed the judicial review application, according to a news report by The Edge Markets on Thursday.

Wan Ahmad also accepted the claimant’s argument that Lim does not enjoy unfettered discretion in deciding whether to approve a company’s tax incentive application.

The judge further agreed with Baleh Hydro’s arguments that Lim had failed to provide reasons for his decisions, which gave rise to the inference that he had no good reason to reject the claim.

Meanwhile, Baleh Hydo senior manager of contract and procurement George Albert William Chapman, affirmed in a affidavit that the company was applying for a certiorari order to quash MOF’s decision.

He added that the company owns, operates and maintains the 1,285 MW hydroelectric power plant located in Kapit with an estimated total project cost of RM10.9 billion and a project timeline from 2017/2018 to 2026/2027.

With the court’s ruling, Saravana Kumar said his Hydro Baleh would be entitled to claim the investment allowance, which will be 100 per cent of the qualifying capital expenditure incurred between 2018 and 2027. — DayakDaily