PETALING JAYA, Tenaga Nasional Bhd (TNB) could be facing additional tax assessments for 2023 and 2024 amounting to RM2 billion, according to CIMB Securities, adding to its mounting tax woes.
This would come on top of the RM5.89 billion in additional assessments issued by the Inland Revenue Board (LHDN) for the 2013–2021 financial years.
“If TNB’s capital expenditure for FY2023–2024 is any indication, we estimate the additional tax exposure could reach RM2 billion, bringing the total tax bill for FY2013–2024 close to RM8 billion,” CIMB said in a note today.
In the event TNB is required to pay the full amount, CIMB estimates an 8–9% downside to its current target price of RM15.75.
Shares of TNB dropped 24 sen or 1.76% to RM13.36 today, bringing its market capitalisation to RM77.88 billion. The stock has declined 9.5% year-to-date.
Despite the tax overhang, CIMB is maintaining its “Buy” call on the utility giant, citing its reasonable valuation and consistent dividend outlook over the coming years.
Tax Troubles Pile Up
July has proven to be a turbulent month for TNB on the tax front. Just last week, the company received a tax bill of RM840.1 million for the 2022 assessment year.
This followed a July 2 Federal Court ruling against TNB in its RM1.25 billion dispute with LHDN over its 2018 tax assessment. The court concluded that TNB was not entitled to claim reinvestment allowances, effectively paving the way for more tax liabilities.
According to TNB’s 2024 annual report, tax disputes amounting to RM5.05 billion remain unresolved. In a filing last Friday, the company said it is currently evaluating legal options to address the latest notice.
TNB also announced that it had submitted a new application for investment allowance under Schedule 7B of the Income Tax Act 1967 on July 25, which could potentially reduce or nullify the tax impact if approved.
The group said it is assessing the financial implications of the court ruling but assured stakeholders that it remains focused on its long-term strategic goals, backed by sound financial management and stable cash flows.
