Petronas to pay via seven subsidiaries

State Legal Counsel Datuk Seri JC Fong (right) and State Legal Officer Nur Azhar Bujang leaving the courtroom after the proceeding. Photo: Ramidi Subari

KUCHING: Petroliam Nasional Berhad (Petronas) will pay the State Sales Tax (SST) to the Sarawak government via seven of its subsidiaries, including Petronas Carigali Sdn Bhd.

The subsidiaries, which are involved in the sale of petroleum products in Sarawak, will be registered as taxable persons under the State Sales Tax Ordinance 1998 by August 15 this year.

The arrangement has been agreed to by all parties where a Consent Order was signed and submitted to the Kuching High Court to withdraw all actions on Thursday.

Judicial Commissioner of the High Court Alexander Siew How Wai, in his ruling said upon the consent of all parties, the action and counterclaim were subsequently struck out and ordered all parties to bear their own costs.

Representing the Sarawak government and Comptroller of SST was State Legal Counsel Datuk Seri JC Fong while Petronas was represented by Andy Tan standing in for Alvin Chong.

Meanwhile, Assistant Minister in the Chief Minister’s Department (Law, State-Federal Relations and Project Monitoring), Datuk Sharifah Hasidah Sayeed Aman Ghazali, in a statement, said that the Sarawak government and Comptroller of SST had withdrawn the civil suit filed by them against Petronas to recover SST for the period of January to June 2019.

It was mentioned that this sum amounted to almost RM1.3 billion including penalties for late payment and interest.

“Petronas has also withdrawn its counterclaim against the state government and the Comptroller for wrongfully imposing SST on Petronas for sale of petroleum products for the said period,” she said.

According to Sharifah Hasidah, Petronas has given written confirmation that the SST for petroleum products will be paid by its seven subsidiaries directly involved in the sale of petroleum products in Sarawak.

“The Comptroller is now making assessment of the amount of SST which each of the subsidiaries has to pay for the year 2019 based upon records of volume of petroleum products actually sold by them and declaration of the sale value thereof provided by these subsidiaries,” she said.

She stated that such assessment would be made by the Comptroller strictly in accordance with the provisions of the State Sales Tax Ordinance 1998 and the State Sales Tax Regulations 1998.

“No discount or waiver would be granted,” said Sharifah, adding that Petronas had given written assurance that these subsidiaries would pay the SST when so assessed.

“With the withdrawal of Petronas’ appeal against the High Court decision that affirms the state’s constitutional authority to impose SST on petroleum products and the termination of the legal process today (Thursday) to recover SST from Petronas which has given an assurance that its subsidiaries will be paying the SST, the issue of the state’s rights to levy SST on petroleum products is finally settled,” she said.

She added that the Sarawak government would now focus on strengthening Petroleum Sarawak Berhad (Petros), Sarawakians, and Sarawakian companies’ participation in the oil and gas sector in collaboration with Petronas.

The five percent SST on petroleum products for export was imposed by the Sarawak government starting Jan 1, 2019 under the State Sales Tax Ordinance 1998.

Petronas is said to be the only oil and gas company operating in the state that has yet to pay the sales tax.

On Monday (August 3), it was reported that Petronas withdrew its appeal against the Kuching High Court’s ruling that Sarawak is entitled to collect SST on petroleum products, while the Sarawak government also withdrew its cross-appeal over the issue.