KOTA KINABALU: The Sabah government has detailed stricter enforcement measures for State Sales Tax on petroleum products as part of its revenue-strengthening strategy under Sabah Budget 2026, amid expectations of a softer revenue outlook next year.
State Finance Minister Datuk Seri Masidi Manjun said the state is applying a reference price method in determining the value of sales for tax calculation to ensure declarations are aligned with prevailing market prices.
“This approach ensures that declarations are aligned with market values and helps optimise State Sales Tax collection,” he said when tabling the Sabah Budget 2026 at the State Legislative Assembly on Friday (Dec 12).
The reference pricing mechanism covers four petroleum products — crude oil, condensate, natural gas to Labuan and liquefied natural gas — with the taxable value based on the higher of either the actual invoice price or a reference price.
Masidi said the move was necessary as Sabah’s revenue structure remains vulnerable due to its heavy reliance on crude petroleum and crude palm oil, both of which are sensitive to global price fluctuations, production levels and exchange rate movements.
He said state revenue for 2026 is projected to decline slightly compared with the revised 2025 estimate, as crude oil prices remain below the US$65 per barrel level, although higher crude palm oil prices have helped to partially offset the impact.
To further tighten enforcement, Masidi said amendments to the State Sales Tax Enactment 1998 and the State Sales Tax Regulations 1999 have been enforced to strengthen tax administration, address potential leakages and enhance transparency and accountability.
He added that the state government was also conducting a comprehensive review of existing rates, charges, fees and rentals to ensure they remain aligned with current market values.
Masidi said Sabah has stepped up efforts to curb revenue leakages through Special Monitoring Operations carried out jointly with federal agencies, including the Customs Department and other relevant enforcement bodies.
In addition, he said all revenue-collecting departments have been urged to strengthen enforcement, fully digitalise collection systems and expand cashless payment methods to improve efficiency, accuracy and transparency.
The state government is also encouraging ministries and departments that are not traditionally involved in revenue collection to explore potential new income streams as part of efforts to broaden Sabah’s revenue base.
