5% petroleum sales tax non-negotiable — Abg Jo

Abang Johari delivering his winding-up speech in the august House.

By Lian Cheng

KUCHING, Nov 13: The 5 per cent sales tax on petroleum products and its payment is non-negotiable, said Sarawak chief minister Datuk Patinggi Abang Johari Tun Openg.

The state sales tax was made effective Jan 1 this year following the amendment of the Oil Mining Ordinance 1958 in the Sarawak Legislative Assembly session in November 2018.

“Let me state categorically in this august House that the GPS (Gabungan Parti Sarawak) government will take all necessary actions to ensure that all persons and entities liable to pay the state sales tax will pay the amount of tax assessed on them.

“I have stated at the inaugural meeting of the Special Steering Committee on MA63 (Malaysia Agreement 1963) in December last year, that the state’s constitutional rights to impose the state sales tax is strictly non-negotiable,” Abang Johari said in his winding up speech at the Sarawak Legislative Assembly today.


He reminded that Sarawak must impose the tax as approved by the august House.

Petronas and other companies importing petroleum products from Sarawak, which includes crude oil, natural gas, LNG, chemical based fertilisers and gas-to-liquid products, must pay the state sales tax assessed by the Controller with effect from Jan 1, 2019.

This has been unanimously passed by this august House in November 2018 and the Sarawak government will not back off on the percentage demanded, which is five per cent.

“If Petronas wants a reduction of the rate of the tax, the shortfall must be compensated by the federal government through an arrangement with Petronas.

“This is to ensure that the revenue from state sales sax on petroleum received for this year and for subsequent years, will never fall below the sum estimated in our annual budget,” said Abang Johari.

He reiterated that if Petronas does not pay the state sales tax that was already assessed, legal action will be instituted to recover the unpaid taxes.

With the sales tax collected from Petronas, the allegation that “the Sarawak government is running a presumptuous budget is clearly irresponsible, provocative and underestimated the state government’s strong resolve to take all necessary actions to ensure that the state sales tax on petroleum products will yield the expected level of revenue”, he continued.

“Nevertheless, Sarawak is able to achieve fiscal sustainability as we adopted a multi-pronged approach in our budget exercise, as I have detailed in my budget presentation. We have other sources of revenue on stream, which will ensure a healthy and well-functioning economy, meaning we don’t rely solely on sales tax imposed on Petronas.” — DayakDaily

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