PETRONAS today paid RM2.9 billion in sales tax on petroleum products for last year to the Sarawak government. 

This payment was part of the national oil company’s negotiated settlement with the state government to end its dispute on the sales tax. 

Petronas chairman Ahmad Nizam Salleh handed a cheque for RM2,956,671,407.36 to Chief Minister Abang Johari Openg at the state secretariat, Wisma Bapa Malaysia, in Kuching late this afternoon. 

“The SST payment by Petronas and its subsidiaries is the result of a settlement reached among Petronas, the federal government and the state government,” Abang Johari said after receiving the cheque.

In the settlement, the national petroleum company was to withdraw its judicial review appeal on a court ruling that had gone against it. 

The chief minister said the withdrawal would signify Petronas recognising Sarawak’s constitutional power to impose the tax under the Sarawak State Sales Tax Ordinance 1998.

Sarawak, on its part, also halted its civil case against Petronas in the Kuching High Court. 

Abang Johari said the SST for this year would only be paid when the assessment has been made based on the volume of the petroleum products – crude oil, condensates, urea and liquefied petroleum gas. 

With Petronas’ RM2.9 billion, the total amount of the petroleum tax Sarawak collected for last year was around RM3.09 billion.

Shell, Murphy Oil, Pertamina and Sapura OMV, who had complied and settled the taxes due, collectively paid RM138 million, Abang Johari said.

The federal committee co-chaired by Senior Minister Fadillah Yusof and Finance Minister Tengku Zafrul Tengku Abdul Aziz met with the state government’s committee headed by Deputy Chief Minister Awang Tengah Ali Hassan to thrash out a new commercial arrangement for Petronas in Sarawak and other outstanding oil and gas disputes.

While what was discussed were kept under wraps, Abang Johari did say the state government would now focus on discussions with the federal government to reach a commercial settlement on other matters relating to oil and gas found and produced in Sarawak. 

Petronas, in a statement on its website, said the payment was “evidence of the oil company’s commitment towards achieving commercial resolution”.

Petronas added it was committed to work with the Sarawak government “in strengthening the Sarawak oil and gas sector towards the creation of a stable and conducive business and investment environment for future growth”. – September 17, 2020.