PETRONAS is being arrogant and “making a fool of itself” by refusing to comply with Sarawak law that requires 5% sales tax on petroleum, said Deputy Chief Minister Awang Tengah Ali Hassan.

Awang Tengah, who is also the state’s natural resources minister, said if Petronas is compliant in other countries it is operating in, it should do the same in Malaysia.

“They are not compliant In Sarawak. It’s embarrassing,” he said to news reports that Petronas was only willing to pay 3%, which it described as “goodwill payment”.

The offer is conditional on Sarawak dropping claims to the sales tax and not to enforce its oil mining ordinance that gives the state absolute rights on all resources, including oil and gas.

Awang Tengah, who moved to strengthen the 60-year-old ordinance last year, said the state has already made clear its stand that Petronas has to comply with the law.

“If it says 5%, it’s 5%.”

Other foreign petroleum companies operating in Sarawak have paid the sale tax, except Petronas, he added.

The just concluded state legislative assembly was told that Petronas had been served with an assessment notice of the tax due, and interest would be levied on late payment.

Petronas has until the end of the year to pay up and avoid interest charges.

Assistant Minister in the Chief Minister’s Office Sharifah Hasidah Sayeed Aman Ghazali, in a statement on the Special Cabinet Committee on the Malaysia Agreement 1963 yesterday, said the dispute over the sales tax with Petronas would continue in talks with the state government and state-owned Petroleum Sarawak Berhad.

Hasidah said another dispute over the oil and gas royalty increment would be a separate topic to be discussed with the prime minister and chief ministers of Sarawak and Sabah. – November 20, 2019.