Muhyiddin welcomes resolution of Petronas, Sarawak sales tax dispute

Prime Minister Muhyiddin Yassin says the agreement will not change Petronas’ role as a national oil company with full powers in supervising the nation’s oil and gas industry.

PETALING JAYA: Prime Minister Muhyiddin Yassin has welcomed the resolution of the sales tax dispute between national oil company Petronas and Sarawak.

This came after Petronas agreed to pay some RM2 billion in sales tax owed to Sarawak to settle a dispute on the management of oil and gas extracted from the state.

“This is in line with the government’s main policy, the Shared Prosperity Vision, which aims to share the country’s prosperity across income, ethnic and regional groups in the country,” he said in a statement.

The resolution, he added, will allow the Sarawak government to be involved in the development of the oil and gas industry in the state together with Petronas.

Muhyiddin added this will not change Petronas’ role as a national oil company with full powers in supervising the nation’s oil and gas industry, in line with the Federal Constitution.

“A committee, chaired by the senior minister (works) and finance minister, will ensure negotiations continue towards a result acceptable by all parties.”

Earlier today, in a joint statement by Petronas and the Chief Minister’s Department, both parties said they had agreed to work together to develop the oil and gas industry in Sarawak, with Petronas agreeing to drop its appeal against the High Court’s decision ordering it to pay the tax.

In return for Petronas’ agreement to settle the payment, Sarawak would gradually decrease the 5% sales tax rate imposed on the oil firm, it added.

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 and resulted in the state government’s legal action against it. - FMT