Sabah begins imposing 5% sales tax on petroleum products

Sabah Chief Minister Shafie Apdal meeting frontliners at a roadblock in Kapayan, Kota Kinabalu, today.

KOTA KINABALU: Sabah has started imposing a 5% sales tax on all petroleum products, Chief Minister Shafie Apdal confirmed today.

He said the decision was made last month.

A Sabah finance ministry letter informing about the implementation of the new tax was distributed to oil firms from April 1.

Shafie said the matter was discussed with former prime minister Dr Mahathir Mohamad during talks on the 20% oil royalty hike.

“But he (Mahathir) had told me to hang on for a while due to the financial constraints which had also affected Petronas,” said Shafie in explaining why the state government had not implemented the 5% tax earlier.

Shafie said he had discussed the sales tax with all oil firms operating in Sabah and that the response had been positive.

He said the oil companies wanted the state government to be clear on the matter so that they could plan on their side.

“The oil firms want clear decisions. They do not want any u-turns on such matters,” he said when met at a movement control order road block operation along Jalan Kepayan.

Sarawak implemented the 5% sales tax on petroleum products on Jan 1, 2019, when the state government was in the opposition.

On March 13, the High Court ruled that both Sabah and Sarawak had the right under the Federal Constitution to impose sales tax on petroleum products from their respective states.