Sarawak can reduce tax upon Petronas’ request but … – Abang Johari


KUCHING – The Sarawak government said today it is prepared to consider any request from Petroliam Nasional Berhad (Petronas) for a reduction in the State Sales Tax imposed on the national oil company for the export of petroleum and petroleum products from its operations in Sarawak, provided it comes up with a commercial arrangement that benefits both parties.

Chief Minister Datuk Patinggi Abang Johari Tun Openg (picture) said he will agree to a reduction in the annual five per cent SST but the state government “must get something equivalent and that equivalent must be through a commercial arrangement”.

He said the total annual revenue on Petronas’ export of oil and gas products from Sarawak is about RM40 billion, and the SST will amount to about RM3 billion.

The state government is determined to get its fair share of the revenue derived by Petronas from its oil and gas resources in Sarawak waters, he said during the question-and-answer session at a business engagement session with the business community, here.

Abang Johari said he has proposed a commercial arrangement formula to the federal government and it is being negotiated.

“Because Sarawak waters … the area belongs to Sarawak. So, we must have a say in that area. Now it (the commercial arrangement) is being negotiated,” he said.

The Sarawak government started to levy the five per cent SST on the sale of petroleum products in January this year after making the announcement when tabling the 2019 State Budget last year.

“We just imposed a five per cent (tax). Actually, there is no ceiling. We can impose a 10 per cent (tax) if we want to but, taking into consideration the petroleum industry at the moment, we just imposed five per cent (tax) on exports,” said Abang Johari.