Finally, Petronas pays up RM2.95 bln to Sarawak for 2019 SST


Petronas chairman Tan Sri Ahmad Nizam Salleh (right) presenting the a mock cheque for the SST to Chief Minister Datuk Patinggi Abang Johari Tun Openg. – Photo by Chimon Upon

KUCHING (Sept 17): Petroliam Nasional Berhad (Petronas) and its subsidiaries have handed over a cheque for RM2,956,671,407.36 to the Sarawak government today as payment of arrears for the State Sales Tax (SST) on petroleum products.

Chief Minister Datuk Patinggi Abang Johari Tun Openg, who received the cheque from Petronas chairman Tan Sri Ahmad Nizam Salleh during a ceremony at Wisma Bapa Malaysia here, said the amount was for SST owed from 2019.

“Petronas and its subsidiaries have today fully settled the payment of State Sales Tax on petroleum products for 2019, as assessed by the Comptroller of State Sales Tax in accordance with the provisions of the Sarawak State Sales Tax Ordinance, 1998.

“The amount paid by Petronas and its subsidiaries is RM 2,956,671,407.36,” the chief minister announced at a press conference held in conjunction with the cheque presentation.

Abang Johari said the SST for this year would be paid when assessment had been made based on the volume of the petroleum products, namely, crude oil, condensates, urea and liquefied petroleum gas actually sold and the sale value of these products.

He said the payment of the SST by Petronas and its subsidiaries was the result of a settlement reached between Petronas, the federal government and the state government.

Abang Johari pointed out that Petronas and Sarawak had reached an agreement whereby Petronas withdrew its judicial review application and recognised the state’s constitutional power to impose the tax, while the state government also discontinued its legal suit against the oil corporation to claim the SST.

Following this settlement of the legal proceedings, he said Petronas and its subsidiaries had registered as ‘taxable persons’ and submitted their returns to the Comptroller of SST.

Abang Johari also thanked Shell, Murphy Oil, Pertamina and Sapura OMV which had earlier complied and settled the SST due to the state totalling RM138 million.

He said 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.

To a question from the press, Abang Johari said he believed that all Sarawakians were happy with the settlement with Petronas.

He also said that the fund would be utilised for various development projects in the state.

In January last year, the Sarawak government imposed the five per cent SST on petroleum products under the state’s Sales Tax Ordinance 1998, which Petronas refused to pay as it claimed it was unconstitutional.

The state government then took legal action against the national oil and gas corporation.

The Kuching High Court ruled on March 13 that Sabah and Sarawak had the right under the Federal Constitution to impose SST on petroleum products.

Petronas had initially filed an appeal in court but the state and the oil corporation reached an agreement in May this year and both sides dropped their legal suits against each other.

Meanwhile, Petronas said in a statement that it was pleased to make the full and final settlement for the SST for last year.

“The payment is evidence of Petronas’ commitment towards achieving commercial resolution. The payment for year 2020, will be made upon assessments by the Sarawak Comptroller of SST,” said Petronas.

It said the payment marked a significant milestone following its withdrawal of the appeal against the judicial review decision and also Sarawak’s withdrawal of the civil action on the SST.

Petronas added that it was committed to working with the Sarawak government in strengthening the state’s oil and gas sector towards the creation of a stable and conducive business and investment environment for future growth.