KOTA KINABALU: Sabah has imposed a 5% state sales tax on all petroleum products, say Chief Minister Datuk Seri Mohd Shafie Apdal.
He said all oil companies including Petronas had been informed of the state’s decision.
Shafie told reporters the plan to impose the state sales tax was always on the table and discussions were held with the previous federal government under Tun Dr Mahathir Mohamad.
He said the state had previously wanted 20% oil royalty as part of Sabah's rights to its resources.
“Dr Mahathir told me to hang on for a while because at that point, there were financial constraints (facing the country)," said Shafie.
The Chief Minister said he had also discussed the move with oil companies.
“So long as we have spelled out our plans, they are okay. They don’t want short term or u-turns in policies. They need us to be clear for them to plan properly, ” he said after visiting a movement control order (MCO) roadblock by authorities at the Jalan Kapayan here on Tuesday (April 7).
Asked if they (oil companies) were already paying, Shafie replied; “ I hope so.”
Earlier this month, a letter from the state Finance Ministry, signed by permanent secretary
Datuk Kaim Kalimin, informed oil companies of the move to impose a 5% sales tax on petroleum and natural gas products, effective on April 1.
The tax was being implemented under Section 10(1) of the State Sales Tax Enactment 1988.
Under the enactment, the petroleum companies were cautioned that they faced a RM50,000 fine or jail up to three years or both if they failed to comply.
Petronas was among nine petroleum companies which received the letter.
Sarawak had also imposed a state sales tax on Jan 1,2019 and Petronas on March 13, lost its bid for a judicial review of the decision.
The move by Sabah and Sarawak to impose the state sales tax follows the Federal Government’s reluctance to increase current oil royalties from 5% to 20%.