KUCHING, March 21: Chief Minister Datuk Patinggi Abang Johari Tun Openg suggests that the federal government reduce its Petroleum Income Tax from the current 38 per cent to 33 per cent so that Petronas and investors would not be burdened when Sarawak imposes its 5 per cent sales tax on petroleum products extracted within its territory.
He said the state government has been negotiating with the federal government to work out a win-win formula, and he was told that the 5 per cent sales tax imposed by the state government would increase cost of investment in the oil and gas industry.
“As I’ve mentioned to the federal government, they have Petroleum Income Tax (PIT) which is about 38 per cent, and for us only 5 per cent. It doesn’t mean that it will increase the cost of investment in Malaysia. But if it really involves cost I think the federal government can reduce their PIT from 38 to 33 per cent and give that 5 per cent to us.
“After all, the resources are from Sarawak. And though in our constitution there is no ceiling to impose sales tax, we have considered the need for Malaysia as well as economic environment, so we have decided only to impose 5 per cent sales tax,” Abang Johari said during the contract signing ceremony between Petronas Carigali Sdn Bhd and Sarawak company Serba Dinamik Holdings Berhad this afternoon.
He said on the question of rights, the state government has studied the Federal Constitution, and acknowledged that the oil and gas industry is under the Federal List.
“We acknowledge that. But it says there subject to the State List 2c. If (Sarawak’s oil and gas is) subjected to the State List, meaning you cannot move forward unless you fulfill the State List,” Abang Johari reasoned.
Nevertheless he gave assurance that the state government is more than willing to work with Petronas and other oil and gas players as long as the constitutional rights over resources in the state is within the state’s power.
“And in this instant I must assure you that we are not going to negate the investments into Sarawak but rather we work together for the benefit of the players and stakeholders in the industry,” said Abang Johari. — DayakDaily