(Aug 19): Singapore is not obliged to pay the higher land assessment tax that the Johor authorities are seeking to levy on the republic's waterworks in Kota Tinggi, and the issue has been raised with Malaysian leaders, Singapore foreign affairs minister K. Shanmugam said yesterday.

The Kota Tinggi District Council issued a notice late last year that sought to double the rate of the land assessment tax imposed on the Johor River Water Works, Singapore’s parliament was told yesterday. The revised rate is more than twice that of the next highest rate, added Shanmugam, who is also Law Minister.

The facility extracts and treats up to 250 million gallons of water a day from the river, in accordance with terms set out under the 1962 water agreement between the two countries.

Shanmugam also said the assessed property value of the waterworks was increased and the new rate was applied to a category that was “created solely for the Public Utilities Board (PUB)”.

Responding to a question from Sitoh Yih Pin, Member of Parliament for Potong Pasir SMC, on the status of the land assessment tax applicable to the PUB’s waterworks in Johor, Shanmugam said: “The PUB’s operations in Johor are governed by the 1962 Water Agreement. That agreement governs what the PUB has to pay, and the PUB is not obliged to pay the land assessment tax that has been sought to be imposed.”

Under the 1962 water agreement – which expires in 2061 – Singapore buys raw water from Malaysia and, in turn, Malaysia buys treated water from the Republic.

Shanmugam added: “There is some additional background on the Johor authorities imposing such taxes in the past. For present purposes, I do not propose to go into what had happened in the past.”

On the latest tax assessments, Shanmugam said his ministry had registered its concerns through two Third-Person Notes. The PUB has also contacted the Kota Tinggi District Council on the issue, he said.

In addition, Shanmugam said he had also raised the matter with his Malaysian counterpart, Tan Sri Anifah Aman, on two occasions, in April and August.

Singapore prime minister Lee Hsien Loong also spoke directly to Malaysian Prime Minister Datuk Seri Najib Razak in May, he added.

Shanmugam noted that Malaysia is aware that the issue of the PUB’s rights under the water agreement is “critical and sensitive” for Singapore.

“The Malaysian federal government has guaranteed in the Separation Agreement that Johor would abide by the 1962 water agreement, and the agreement does not require the payment of this land tax. We have requested the Malaysian federal government to address the issue,” he said.

The Malaysian federal government has indicated that it will work with the Johor state government to address Singapore’s concerns, Shanmugam added. – TODAY Online