Petronas confirms its subsidiaries will pay sales tax, says Sarawak

Petronas has given the Sarawak government an assurance that its seven subsidiaries will pay their sales tax in full to the state.

KUCHING: Petronas has given written confirmation that the sales tax for petroleum products will be paid by seven of its subsidiaries to the state government, a Sarawak assistant minister said.

In a statement today, Assistant Law, State-Federal Relations and Project Monitoring Minister Sharifah Hasidah Sayeed Aman Ghazali said the subsidiaries were directly involved in the sale of petroleum products in Sarawak.

She said the companies were in the process of registering with the comptroller of state sales tax, adding that it would be completed by Aug 15. The state attorney-general is the tax comptroller.

“The comptroller is also making assessment of the amount of sales tax payable by the subsidiaries for 2019,” she said, adding that this would be done in accordance with the provisions of the State Sales Tax Ordinance 1998 and the State Sales Tax Regulations 1998.

The Sarawak government would now focus on strengthening state-owned Petroleum Sarawak Berhad (Petros) as well as the participation of Sarawakians and Sarawakian companies in the oil and gas sector in collaboration with Petronas, she said.

In January last year, the Sarawak government imposed a 5% sales tax on Petronas’ petroleum products under the state’s Sales Tax Ordinance 1998.

Petronas, however, refused to pay the tax, saying it was unconstitutional, resulting in the state government taking legal action against it.

On March 13, the Kuching High Court ruled that Sabah and Sarawak had the right under the Federal Constitution to impose sales tax on petroleum products, dismissing Petronas’ bid to declare the Sarawak sales tax null and void.

On Monday, it was reported that Petronas had withdrawn its appeal against the court ruling, and the state government had also dropped its cross-appeal.