State Treasury to collect 5 pct sales tax on petroleum products

Abang Johari (front, left) being congratulated by members of his cabinet after delivering his winding-up speech today.

By Peter Sibon

KUCHING, Nov 14: The State Treasury Department has been entrusted to collect the five per cent sales tax on petroleum-based products, said Chief Minister Datuk Patinggi Abang Johari Tun Openg today.

“The collection is by the State Treasury (Department). They have the mechanism to do it,” he told reporters after delivering his winding-up speech at the State Legislative Assembly here today.

The chief minister’s response puts to rest the question as to which state authority would collect the tax, which is expected to enable the state to collect an additional revenue of RM3.897 billion next year.

Earlier in his speech, Abang Johari explained that the state government’s decision to impose this particular sales tax was because it was conferred by the Federal Constitution, in Schedule 10, Part V, Section 7.


“Hence, it is constitutionally legitimate for the state to impose the sales tax. The State Sales Tax Ordinance 1998 allows the state to impose sales tax on goods and services and is applied on sale value,” he explained.

Abang Johari, who is also Finance Minister, said under the broad category of taxable petroleum products, the first is crude petroleum, which is predominantly exported from the state.

“For the information of this august House, the crude oil extracted from Sarawak is of premium grade i.e. light and sweet crude that is for export and fetches a premium price.

“The second major category of taxable goods is natural gas, which is predominantly sold to LNG plants for processing. As for the other categories, namely liquefied natural gas, chemical-based fertilisers and gas-to-liquid products such as kerosene, naphtha, and wax, they are also mainly for export,” he said.

Abang Johari giving the thumbs-up to members of the media after delivering his winding-up speech today.

The chief minister also clarified that any of these products that are consumed locally were not significant in volume.

“Furthermore, these petroleum products that are to be sold locally shall be exempted from the sales tax,” he said.

Abang Johari reiterated that the decision to impose the sales tax on petroleum products was made after careful study and thorough analysis. He gave assurance that it would not burden the people as it would have no impact on their cost of living.

“To the business community, the imposition of the sales tax on petroleum products will have no impact on the cost of doing business in Sarawak, contrary to the ignorant opinions of some of the members from Pakatan Harapan,” he said.

The state government is expected to earn approximately RM3.5 billion from the 5 per cent sales tax on petroleum products. — DayakDaily