Asset Funded by a Group Company? High Court Rules LHDN Cannot Deny Your Ownership on That Alone

Your company buys an asset in its own name, but a sister company helps pay for it, manages it or insures it.

Can LHDN then say your company is not the real owner, and refuse tax claims only an owner can make?

Not for that reason alone, says a recent Johor Bahru High Court decision.

What happened?

A Malaysian shipping company bought 16 ships, registered in its own name. As the owner, it claimed two tax benefits: tax exemption on its shipping income, and capital allowances, which are tax deductions for the wear and tear of assets a business owns.

LHDN rejected both. Its reason was that a related company in Singapore helped pay for, manage and insure the ships, and the shipping company did not have enough money of its own. So in LHDN's view, the Singapore company was the real owner. LHDN issued tax bills totalling RM78,697,442.70, including penalties.

What did the court say?

To decide who owns an asset, LHDN had to properly consider the buying and registration papers: the purchase agreements, bills of sale and ship registration certificates, which named the shipping company as owner.

LHDN may look at who paid and who runs the asset. But it cannot make "you must pay for it yourself" or "no related company can be involved" into extra conditions of ownership, and skip what the papers show. That was the wrong test.

So the court cancelled the tax bills to the extent they rested on that reasoning, with the related penalties, in its judgment dated 10 November 2026. LHDN must now reconsider them. It did not say every claim must be approved.

What does this mean for you?

If your group shares funding or management between companies, the company that buys and holds the asset can still be its owner for tax purposes.

The key is your paperwork. Keep the purchase agreement, transfer documents, registration and your own accounts in order for every major asset.

If you need help with tax audit and investigation support or tax planning and advisory, our Taxation Services team can assist. Feel free to WhatsApp us at 010-246 2151.