Petronas' appeal against Sarawak's sales tax entitlement fixed for June 23

Petronas appeal against Sarawak comptroller on petroleum product sales tax fixed for June 23

Petronas appeal against Sarawak comptroller on petroleum product sales tax fixed for June 23

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*This story has been updated to amend an error in the second paragraph, which earlier stated that the hearing was to take place in Kuching*

PUTRAJAYA (June 11): The Court of Appeal has fixed June 23 to hear the appeal by Petronas against the Kuching High Court's decision three months ago that Sarawak is entitled to collect sales tax on petroleum products.

The hearing is scheduled to take place in Putrajaya, according to the Federal Court chief registrar's cause list website.

This is despite a joint statement issued by the Sarawak state government and Petronas on May 8 saying the national oil company has agreed to pay in full the petroleum products sales tax imposed by Sarawak for the year 2019, which is in excess of RM2 billion, or 5% of the products’ sales value.

The joint statement stated that Petronas has retracted its appeal against a decision by the Sarawak High Court to dismiss Petronas’ request for a judicial review to declare the State Sales Tax imposed by the Sarawak Government as null and void. 

In return, the Sarawak State Government has dropped all claims in its civil case against Petronas for the payment of petroleum products sales tax.

This came as the two parties had reached an agreement on the management of Sarawak's oil and gas assets, and the sales tax on petroleum products, the statement had said.

The parties also agreed that future petroleum products sales tax will be lower and staggered based on future negotiations, under the State Sales Tax (Taxable Goods and Rate of Tax) (Amendment) (No 2) Order, 2018.

“The Sarawak State Government also agrees that the sales tax will be limited to petroleum products stipulated under Order 2018,” the statement read.

However, last night, Bernama quoted Sarawak Consultative Committee on Malaysia Agreement 1963 (MA63) chairman Datuk Amar Mohd Asfia Awang Nassar as saying that Petronas had yet to pay the sales tax that was due to the state and instead filed an appeal over the matter at the Court of Appeal.

Mohd Asfia, who is also the Sarawak state legislative assembly speaker, said the Sarawak state government would continue its civil case against Petronas if no decision is reached through negotiations with the company.

Commenting on the joint statement issued last month, Mohd Asfia said it was only a press statement and not a formal agreement.

“It was a statement based on discussions back then, and today, I am making it clear that we will continue our civil case against Petronas. Our sales and service tax is non-negotiable,” he added.

The case involving Petronas, the Sarawak government and the state’s Comptroller of State Sales Tax came up for e-review before the Court of Appeal today; it is understood that the review is to address procedural matters before the hearing, which had been fixed on June 23.

E-review is a case management tool where parties appear through video conferencing with the court.

On March 13, High Court Justice Azhahari Kamal Ramli ruled that according to the Federal Constitution, Sabah and Sarawak had the right to impose sales tax on their petroleum products.

Justice Azhahari also rejected Petronas' application to file a judicial review to declare Sarawak's sales tax invalid and void.

Sarawak had imposed a 5% sales tax on petroleum products on Jan 1 last year under the state’s Sales Tax Ordinance 1998.

Sabah Chief Minister Datuk Seri Shafie Apdal had in April said the state had also implemented a 5% sales tax on all petroleum products in the state with effect from March.

Read also:
Petronas to pay Sarawak RM2b sales tax for 2019, with resolution reached on future arrangements
Petronas yet to pay sales tax, says Sarawak State Assembly Speaker