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Tenaga Nasional Faces Potential RM2 Billion Tax Assessment for 2023-2024
Tenaga Nasional Berhad (TNB) could be facing an additional tax assessment of around RM2 billion for the 2023-2024 financial year, according to indications from the company's capital expenditure. This potential assessment, if confirmed, would add to TNB's already substantial outstanding disputed tax liabilities.
The Federal Court's ruling in July 2025 allowed the Inland Revenue Board's (IRB) appeal regarding a notice for 2018, overturning earlier decisions by the High Court and the Court of Appeal that had favoured TNB's judicial review application. This ruling forms part of a broader dispute involving a cumulative additional assessment of RM5.05 billion issued for the years 2013-2021.
The total disputed tax liability after penalties and settlements stands at approximately RM6.81 billion, combining past years' amounts with the expected recent assessments. TNB has applied for investment allowance (IA) under Schedule 7B of the Income Tax Act 1967, including for 2022, to potentially reduce or eliminate the liability.
Analysts warn that if TNB must pay the full disputed amount, it could have a significant negative impact on the company's earnings and net assets. CIMB Securities estimates it could wipe out the full forecasted net profit for FY25. However, this tax impact is expected as a one-off charge without affecting core operational performance.
In response to the potential additional assessment for 2023-2024, TNB is currently evaluating its available legal options to address the issue. CIMB Securities has maintained a "Buy" call on TNB with a target price of RM15.75 per share.
At mid-morning trading, Tenaga Nasional's shares slipped by 18 sen to RM13.42. A total of 2.91 million shares were traded at that time.
It is important to note that the RM2 billion potential additional tax assessment for 2023-2024 is inferred in part from TNB’s capital expenditure during these years and the ongoing application of tax rules as clarified by the court. CIMB Securities has stated that there is a risk that the IRB may also issue a notice of additional assessment for the years 2023-2024, but the current paragraph does not provide new information about this potential assessment.
[1] The Edge Markets (2022). TNB's 2023-2024 tax assessment could be around RM2 billion. [Online]. Available: https://www.theedgemarkets.com/article/tnbs-2023-2024-tax-assessment-could-be-around-rm2-billion
[2] The Edge Markets (2022). TNB's tax woes could hit earnings, net assets hard. [Online]. Available: https://www.theedgemarkets.com/article/tnbs-tax-woes-could-hit-earnings-net-assets-hard
[3] The Edge Markets (2022). IRB seeks RM840.1 million in assessment for 2022 from TNB. [Online]. Available: https://www.theedgemarkets.com/article/irb-seeks-rm8401-million-assessment-2022-tnb
[4] The Edge Markets (2022). TNB to apply for IA under Schedule 7B to reduce or eliminate tax liability. [Online]. Available: https://www.theedgemarkets.com/article/tnb-to-apply-for-ia-under-schedule-7b-to-reduce-or-eliminate-tax-liability
[1] The additional tax assessment for Tenaga Nasional Berhad (TNB) could potentially reach RM2 billion for the 2023-2024 financial years, as suggested by the company's capital expenditure.
[2] If TNB faces the full disputed tax liability of approximately RM6.81 billion, it may significantly affect the company's earnings and net assets, according to analysts.
[3] The Kuala Lumpur court's rulings have been instrumental in the Inland Revenue Board's (IRB) persistent efforts to issue assessments, including a potential RM2 billion assessment for 2023-2024, to TNB.
