Petronas finalising sales tax agreement with Sarawak

PUTRAJAYA: National oil company Petronas says it is finalising its agreement with the Sarawak government over the sales tax imposed on petroleum products.

Petronas’ lawyer Malik Imtiaz Sarwar told reporters this after case mention at the Court of Appeal today.

“We undertake to withdraw the appeal before Aug 3,” he added.

Court of Appeal judge Kamaludin Md Said had adjourned Petronas’ appeal to then, pending the settlement. Other judges who sat with him were Ravinthran Paramguru and Abu Bakar Jais.

State legal counsel JC Fong told the court that the state government did not object to the postponement as Petronas had made the undertaking to withdraw its appeal based on its letter.

Petronas filed the appeal against the Kuching High Court’s decision to dismiss its judicial review to challenge Sarawak’s Sales Tax Ordinance 1998 requiring it to pay the state a 5% sales tax on petroleum products.

The company claimed that the state law used to impose the tax was unconstitutional.

Sarawak imposed the tax on its petroleum products on Jan 1, 2018, under the Sales Tax Ordinance 1998. It also sued Petronas for unpaid state sales tax and penalties amounting to RM1.3 billion.

Petronas and the Chief Minister’s Department previously 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. - FMT