KUALA LUMPUR (May 8): Petronas has agreed to pay in full the petroleum products sales tax imposed by Sarawak for the year 2019, which amounts to RM2 billion, which is 5% of the products’ sales value.
This marks a resolution for the legal tussle between Petronas and Sarawak on the matter, as well as on the management of oil and gas assets in the State.
In a joint statement with the Sarawak State Government today, the two parties said they have reached an agreement on the management of Sarawak O&G assets, and the sales tax on petroleum products.
The two parties have further 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.
It further stated that both parties have agreed that the best approach to reach an amicable solution is through commercial settlement to create a stable environment for business and investments.
As such, Petronas has retracted its appeal against the decision by the Sarawak High Court in relation to a judicial review request dated March 13.
In return, the Sarawak State Government has dropped all claims in its civil case against Petronas for the payment of petroleum products sales tax.
“However, all agreements between Sarawak and Petronas under the Petroleum Development Act 1974 are still valid and in effect.
“Similarly, Petronas is still recognised as the nation’s oil company with the authority to regulate the development of the entire oil and gas industry in the nation, in line with the Federal Constitution,” the statement read.
Petronas, together with the Sarawak State Government, will continue to develop the industry in the State, it added.
“Meanwhile, Petronas will continue to engage the Sarawak State Government to facilitate a more active participation by the State Government in the investment opportunities in the oil and gas industry in the State, based on commercial terms.
“This includes collaborative opportunities at the operational level in Sarawak.
“To ensure the implementation of the commercial resolution, Senior Minister (Works) [Datuk Seri Fadillah Yusof] and Minister of Finance [Tengku Datuk Seri Zafrul Tengku Abdul Aziz] will be responsible to chair a joint committee for this purpose,” the statement added.