PETRONAS will withdraw its appeal against the Kuching High Court’s decision that Sarawak is entitled to levy a sales tax on petroleum products, Chief Minister Abang Johari Openg said today.

He said the national petroleum company will pay the disputed tax, which the Sarawak Comptroller of Sales Tax has assessed to be at least RM2.8 billion.

The amount does not include interest for late payment and other penalties.

Abang Johari said the federal government has directed Petronas not to pursue the case when it is brought before the Court of Appeal on June 23.

“Once the court proceedings are over, they will pay,” the chief minister told journalists at a press conference after a Parti Pesaka Bumiputera Bersatu meeting this evening.

“(The) federal government has directed them not to appeal.  The federal government wants this issue to be settled and they don’t (want Petronas) to appeal,” he said.

Abang Johari said Putrajaya wishes to “move on” and has called for negotiations on Sarawak’s participation in the country’s oil and gas sector.

Sarawak imposed a 5% tax on Petronas products on January 1 last year, when the Pakatan Harapan government was in power.

Kuching High Court judge Azahari Kamal Ramli ruled on March 13 that Sarawak has the constitutional right to impose a sales tax on petroleum products.

Petronas’ appeal against the decision was to have been heard on June 23 at the Federal Court in Putrajaya.

Just last week, Sarawak consultative committee chairman Mohd Asfia Awang Nassar had stated the sales tax is non-negotiable and that the state will pursue a civil case against Petronas if there is no resolution to the dispute. 

The committee is a bipartisan group formed by the state legislative assembly to advise the state’s negotiators in talks with the federal government on Sarawak’s rights under the Malaysia Agreement 1963.

Abang Johari today announced the state has formed a new “working committee with executive powers” to negotiate with Petronas and Putrajaya on outstanding oil and gas disputes.

It is chaired by Deputy Chief Minister Awang Tengah Ali Hassan.

The five other committee members are Assistant Minister in the Chief Minister’s Office Sharifah Hasidah Aman Ghazali; Sarawak Attorney-General Talat Mahmood Abdul Rashid; special counsel to the state government J. C. Fong; state economic planning unit director Muhammad Abdullah Zaidel; and Petros CEO Saau Kakok. – June 12, 2020.