Sabah aims to collect RM1.25bil in tax from Petronas

KOTA KINABALU: Sabah expects to collect RM1.25bil in state sales tax from Petronas next year, says Deputy Chief Minister Datuk Seri Dr Jeffrey Kitingan.

He said Prime Minister Tan Sri Muhyiddin Yassin agreed to this after the Gabungan Rakyat Sabah (GRS)-led state government discussed the tax issues with him.

Jeffrey said Sabah would collect the 5% sales tax on oil and gas from the national oil corporation from 2021, adding that the RM1.25bil would come straight from Petronas.

The previous Warisan Plus state government imposed a 5% sales tax on oil and gas since June this year on oil and gas firms operating in Sabah.

However, Petronas had yet to pay said taxes. Jeffrey said the state government would now collect the sales taxes from all oil and gas firms in Sabah.

“We will have more funds for rapid infrastructure, human resources and economic development,” he said in a statement yesterday.

Jeffrey also said that the state government wrote to Muhyiddin asking for a token RM500mil as part of the fulfilment of the Federal Government’s obligation to Sabah.

Under Schedule 10, Article 112C of the Federal Constitution, the Federal Government is obliged to give Sabah 40% of net revenue derived by it from the state.

Jeffrey said the RM500mil was better than the previous Pakatan Harapan administration’s “settlement” consisting a RM53.4mil special grant for Sabah.

“The previous deal between the Warisan Plus government and Pakatan-led Federal Government was flawed.

“A paltry sum of RM53.4mil for the next four years and RM106.8mil in the fifth year means that we do not have any room to re-negotiate the amount for the next five years.

“This could result in huge losses in revenue for the state,” he added.

Jeffrey said the GRS-led state government has an opportunity to rectify “the grave mistake of the Warisan government.”

He also said the lower allocation of RM5.1bil for Sabah’s development under Budget 2021 is disappointing, as it was lower than the RM5.2bil given for 2020.

He hoped more funds would be allocated for Sabah’s infrastructure development once the battle with Covid-19 was over.

“Increasing infrastructure development funds for Sabah is crucial as the state is desperate to keep up with its neighbours.

“The Federal Government has a policy of ‘shared prosperity’, and Sabah as an equal partner in the federation must also share the benefit of this policy,” said Jeffrey, who is Sabah STAR president and a Perikatan Nasional government member.

He said that the government was also forced to set aside RM17bil to deal with the Covid-19 pandemic.

Judging by the distribution of the development funds, he said that Sabah will benefit from not only the RM5.1bil specified for Sabah.

“The total development expenditure is RM69bil and they include the Pan-Borneo Highway in Sabah, agriculture development, economic corridors, and several other incentives meant to stimulate the economy,” he said.

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