High Court allows UOA Development unit to challenge tax bill on property sale to REIT

KUALA LUMPUR (May 25): The High Court has allowed Distinctive Acres Sdn Bhd, an investment unit of property developer UOA Development Bhd (KL:UOADEV), to challenge a RM165.66 million tax bill and penalty linked to the sale of an asset to a REIT in 2020.

Judge Alice Loke Yee Ching also granted a temporary stay for Distinctive Acres until June 16. Both the company and the Inland Revenue Board (IRB) must appear in court on that date.

Earlier, Loke dismissed an objection raised by the IRB’s senior federal counsel, Nur Irmawatie Daud.

The company was represented by Datuk S Saravana Kumar and Tan Jia Hua of Messrs Rosli Dahlan Saravana Partnership. Saravana confirmed Monday’s outcome when contacted by The Edge.

Last October, it was reported that Distinctive Acres was issued a notice of additional assessment by the IRB over the disposal of UOA Corporate Tower in Bangsar South to UOA Real Estate Investment Trust (KL:UOAREIT) in 2020.

IRB decided that the gain was subject to corporate income tax rather than real property gains tax, the company said.

“Based on advice from our tax consultant, the company has a strong basis to challenge the treatment and validity of the additional assessment,” UOA Development said in its filing with the bourse then.

Challenge filed last October

Following that, UOA Development, through Distinctive Acres, filed a judicial review application on Oct 22 last year to seek permission from the court to quash the IRB’s decision to issue the notice of additional assessment dated Oct 10, 2025.

In judicial review proceedings, leave (permission) had to be gained for the merits of the challenge to be heard.

The additional assessment arose from the disposal of UOA Corporate Tower A, which the company claims was illegal, void, unlawful and/or in excess of authority, irrational and/or unreasonable, and resulted in a denial of the company’s legitimate expectations.

Besides this, the company is seeking a declaration that the gains arising from the disposal of Tower A should not be subjected to double taxation and should only fall within the scope of the Real Property Gains Tax Act 1976 (RPGTA).

Distinctive Acres is also seeking a declaration that the gains arising from the disposal of Tower A are exempted from the RPGTA by virtue of the Real Property Gains Tax (Exemption) (No 4) Order 2003.

It is also seeking a stay of enforcement and effect of the IRB decision until the full and final determination of the application to quash the decision.

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