Two oil and gas companies ordered to pay taxes or stop their activities


Datuk Masidi Manjun, Minister of Local Government and Housing of Sabah

KOTA KINABALU (July 19): The Sabah state government will stop and cancel all work passes for the operations of two oil and gas companies for non-payment of RM97.31 million tax. state sale and penalty.

Local Government and Housing Minister Datuk Seri Panglima Masidi Manjun told the State Assembly on Tuesday that this would be enforced on October 1, 2022, if the claimed amount is not settled.

On July 8, the Sabah government sent a letter to the companies informing them of the case.

Masidi revealed this when he provided an update on the case involving Repsol Oil & Gas Ltd (Repsol) and SEA Hibiscus Sdn Bhd (SEAH), which refused to pay state sales tax.

In response to MP named Datuk Seri Panglima Yong Teck Lee, who inquired about the outcome of the case involving Repsol and SEAH, Masidi said Sabah government sent them a letter on June 8 (this year) to pay state sales tax. , and on June 14, the state government rejected the plea letter sent by the companies.

He said that on June 21, the State Sales Tax Director issued a notice that the State Sales Tax and RM97.31 million penalty must be paid within 30 days. from the date of issue of the letter or the civil action will be taken.

On June 22, the affected companies met with Petronas and the Sabah government to discuss the payment whereby the companies requested a one-week grace period, Masidi said.

He added that on July 1, the Sabah government met with Petronas for further government action on the companies following the agreement reached on June 22.

Masidi also informed the House during the question and answer session that the government of Sabah has collected RM808 million (73%) out of the estimated RM1.1 billion in sales tax revenue for oil tax for this year.

He said that between April 1, 2020 and June 30, 2022, the state government had already raised RM2.458 billion.

Masidi also informed that two other petroleum products will be subject to state sales tax starting August 1, 2022.

He said it was part of the state government’s efforts to increase resources and increase state revenue.

“The products are ammonia and urea, which are expected to contribute a total of RM46 million to state revenue this year,” Masidi said in response to a question from Yong.

Masidi also informed the August House that the state government has begun to implement the 5% state sales tax on petroleum products, namely crude oil and natural gas, including liquefied natural gas, April 1, 2020.

He said this was stipulated in the State Sales Tax (Rates Taxes) Order of 2018.

He explained that according to Section 10(1) of the State Sales Tax Act of 1998, any person engaged in the business of selling or supplying taxable goods must apply for the Sales Tax License. of the state with the state sales tax director.

“To date, a total of 13 oil and gas companies have registered and obtained a state sales tax license,” Masidi said.

He also stated that under Section 14 of the State Sales Tax Act of 1998, the tax license holder must submit an assessment statement, namely Form 4 with payment of the tax within 28 days of the taxable period.

“For example: for the taxable period of June, Form 4 must be completed and submitted with payment on or before July 28,” he said.

He also explained that the provisions of the State Sales Tax Act of 1998 also allow the state government to take action to recover unpaid taxes from the taxable company.

“Anyone who fails to submit a valuation statement or pay the amount of state sales tax due shall be liable to a fine not exceeding RM50,000 or imprisonment. not exceeding three years or both;
“The State Sales Tax Director may assess, in his or her best discretion, the amount of tax to be paid.

“If an amount of state sales tax is not paid within the prescribed time, a penalty of 10% may be assessed and increased by an additional 10% for each 30 days of unpaid tax balance up to a maximum penalty by 50%,” he said.

He also warned that the state sales tax director could revoke a sales tax license and said a business could not operate without a state sales tax license.

He also added that the state sales tax director can apply to the director general of immigration to ban anyone from leaving Malaysia.

“State sales tax and penalties may be recovered as a civil debt payable to the state government,” he explained.

Besides Yong, Senallang MP Datuk Seri Panglima Mohd Shafie Apdal also challenged Masidi as he asked for an update on opportunities for local Sabahans in the oil and gas industry.

“Where is the participation of (our) oil and gas companies? We must be firm in securing long-term opportunities for the children of Sabah,” Shafie said.

He also questioned the measures taken by the government of Sabah to profit from the oil and gas sector since Sabah is still the poorest state in the country.

In response to Shafie, Masidi said that one of the contents of Sabah government’s agreement with Petronas is towards the establishment of SMJ Petroleum which will act as an umbrella to facilitate opportunities for local companies and increase their capacities.

“We have a committee that meets once every few months to follow up on updates to ensure that more businesses and people in Sabah are involved in the oil and gas industry,” he said. -he declares.

He also added that since early last year, the state government has made it mandatory for non-Sabahans to apply for work permits to work on oil rigs in Sabah.

“Our policy is to prioritize Sabah…we will refer to our database and if we have the expertise we will not issue the work permit. We have 2,000 skilled Sabahans as oil rig workers,” he said.

He added that this has already been implemented and the results and support from oil and gas companies are encouraging.

He also said upscaling was underway with Petronas.

“If we follow through on what is promised, in a few years we can be proud to finally be moving in the right direction in the oil and gas industry.”


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