PETRONAS has denied a report that it is in conflict with Putrajaya over payment of taxes to Sarawak. 

The report by Reuters, which cited unnamed sources, said the national oil company and its management were hoping to persuade Prime Minister Muhyiddin Yassin to drop a proposal for Petronas to pay Sarawak nearly RM3 billion in sales taxes on petroleum products.

“The alleged conflict between the prime minister, Petronas and its shareholder is mere speculative reporting without any basis whatsoever. 

“Petronas wishes to reiterate that in line with the joint statement issued on May 8, 2020, Petronas, in collaboration with its shareholder, is currently in the midst of negotiations with the Sarawak state government to achieve appropriate commercial resolution,” Petronas said tonight in a statement.

Reuters also reported that the Petronas chief executive of 37 years, Wan Zulkiflee Wan Ariffin had resigned in protest over the proposed settlement of tax arrears, the case of which was being heard in the courts.

The sources said the settlement was in exchange for political support from the Sarawak government, which is run by Gabungan Parti Sarawak, whose MPs’ votes are seen as crucial for the Muhyiddin government’s continued stay in power.

Petronas said it remained committed to working closely with Sarawak counterparts and stakeholders “to reach the best outcome on this matter”.

Petronas this week filed to withdraw a federal court appeal against a court ruling that Sarawak was entitled to be paid sales tax on oil and gas products.

This followed Sarawak Chief Minister Abang Johari Openg’s June 12 announcement that the federal government had directed Petronas not to pursue its appeal against a court ruling that Sarawak has the right to levy tax on the oil and gas firm’s products.

“Once the court proceedings are over, they will pay (the sales tax),” the chief minister said in a press conference. – June 26, 2020.