The Malaysian High Court orders that the generation of electricity is manufacturing

  

In year 2018, TNB claimed reinvestment allowances (“RA”) on capital expenditure in the amount of RM1.8billion incurred for the purpose of expanding, modernizing and automating its business. 

  

Dated 13 July 2020, the IRB issued a notice of additional assessment of MYR 1.8 billion, disallowing the RA claim on the grounds that TNB’s activity of generation, distribution and transmission of electricity is merely a service activity and not a manufacturing activity. 

  

TNB  filed a judicial review application to the High Court to set aside the notice of additional assessment. 

The High Court in its decision allowed TNB’s judicial review application to set aside the notice of additional assessment. The High Court agreed that TNB is in the business of manufacturing electricity, and as such, is entitled to claim the RA on the capital expenditure incurred in YA 2018. 

  

The IRB may appeal against the decision to the Court of Appeal.