KUCHING (Sept 21): The state government of Sarawak did not offer any discount or reduction at all to Petroliam Nasional Berhad (Petronas) and its subsidiaries when it comes to the payment of State Sales Tax (SST), said Datuk Sharifah Hasidah Sayeed Aman Ghazali yesterday.
The Assistant Minister in the Chief Minister’s Department (Law, State-Federal Relations and Project Monitoring) said the amount paid by Petronas and its subsidiaries was in accordance with assessments made by the Comptroller under the State Sales Tax Ordinance 1988.
“It is not the result of any negotiations for commercial settlement or the relinquishment of any rights over oil and gas found and produced in Sarawak. No discount or reduction at all was given to Petronas or subsidiaries,” she said in a statement.
Sharifah Hasidah also clarified that the SST collected from oil companies last year exceeded the actual amount of SST estimated.
She said this was because the State Cabinet, on Dec 13, 2018, decided to remove natural gas from the list of taxable goods.
“In view of the misconceptions on the sum of RM2.956 billion SST received from Petronas, it is necessary for me to make this clarification.
“Firstly, it is said that the amount received is less than the sum estimated in the 2019 Budget presented to DUN in November 2018, which is RM3.897 billion.
“When the 2019 Budget was tabled, natural gas was one of the petroleum products subject to payment of five per cent SST. However, on Dec 13, 2018, the State Cabinet decided to remove natural gas from the list of taxable goods.
“This is to avoid Liquefied Natural Gas (LNG) being subject to SST twice, for example, first when the LNG Plants in Bintulu purchased the natural gas for manufacturing LNG, and then again when the LNG is sold.
“Such double taxation on LNG produced in Bintulu would make the selling price for the product uncompetitive in the global market,” she explained.
According to Sharifah Hasidah, the removal of natural gas in the estimated SST from petroleum products had resulted in a reduction of the tax collection by about RM1 billion.
“Thus, for the Budget 2020 presented to the Dewan in November last year, the estimated amount of revenue from SST levied on petroleum products is RM2.8 billion,” she pointed out.
She said the SST of RM2.956 billion last year received from Petronas was based upon actual volumes of petroleum products sold and the sale value thereof based on returns of sales of these products submitted to the Comptroller of SST and verified by the audited financial statements of the companies in the Petronas Group.
As such, she said the sum paid by Petronas Group and other oil companies exceeded the actual amount of SST estimated for last year when natural gas was excluded as a taxable item.
The Sarawak government had earlier collected SST worth RM138 million from other oil companies.