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Petronas President Tan Sri Ahmad Nizam Salleh (right) presents the dummy check for the SST to Chief Minister Datuk Patinggi Abang Johari Tun Openg. – Photo by Chimon Upon
KUCHING (September 17): Petroliam Nasional Berhad (Petronas) and its subsidiaries delivered a check for RM2,956,671,407.36 to the Sarawak government today as payment of arrears of the state sales tax (SST) on petroleum products.
Chief Minister Datuk Patinggi Abang Johari Tun Openg, who received the check from Petronas Chairman Tan Sri Ahmad Nizam Salleh, during a ceremony in Wisma Bapa Malaysia here, said the amount was for SST owed since 2019.
“Petronas and its subsidiaries have today fully settled the payment of the state sales tax on petroleum products for 2019, as assessed by the Comptroller of state sales tax in accordance with the provisions of the State Sales Tax Ordinance Sarawak 1998.
“The amount paid by Petronas and its subsidiaries is 2,956,671,407.36 ringgit,” the prime minister announced at a press conference held in conjunction with the presentation of the check.
Abang Johari said this year’s SST would be paid when an assessment was made based on the volume of petroleum products, i.e. crude oil, condensates, urea and liquefied petroleum gas actually sold and the sale value of these. products.
He said that the SST payment for Petronas and its subsidiaries was the result of an agreement reached between Petronas, the federal government and the state government.
Abang Johari noted that Petronas and Sarawak had reached an agreement whereby Petronas withdrew its request for judicial review and recognized the constitutional power of the state to impose the tax, while the state government also suspended its legal claim against the oil corporation to claim the SST.
After this liquidation of the judicial process, it said that Petronas and its subsidiaries had registered as “taxpayers” and presented their declarations to the SST Comptroller.
Abang Johari also thanked Shell, Murphy Oil, Pertamina and Sapura OMV who had previously complied with and agreed to the SST due to the state for a total of RM138 million.
He said the state government would now focus on discussions with the federal government to reach a trade agreement on other issues related to the oil and gas found and produced in Sarawak.
To a question from the press, Abang Johari said that he believed that everyone in Sarawak was happy with the deal with Petronas.
He also said that the fund would be used for various development projects in the state.
In January last year, the Sarawak government imposed five percent SST on petroleum products under the state’s Sales Tax Ordinance of 1998, which Petronas refused to pay because it claimed it was unconstitutional.
The state government then took legal action against the national oil and gas corporation.
The Kuching High Court ruled on March 13 that Sabah and Sarawak had the right under the federal Constitution to impose OSH on petroleum products.
Petronas had initially filed an appeal in court, but the state and the oil corporation reached an agreement in May this year and both parties dropped their legal claims against each other.
Meanwhile, Petronas said in a statement that it is pleased to reach the final and full settlement of the SST last year.
“The payment is proof of Petronas’s commitment to achieving a business resolution. Payment for 2020 will be made through assessments by the Sarawak Comptroller of SST, ”said Petronas.
He said the payment marked a significant milestone following his withdrawal from the appeal against the judicial review decision and also Sarawak’s withdrawal from the civil action on the SST.
Petronas added that it was committed to working with the Sarawak government to strengthen the state’s oil and gas sector towards creating a stable business and investment environment conducive to future growth.
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