Should Petronas accept the High Court ruling on Sarawak sales tax?

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Petronas Should Accept High Court Ruling on Sarawak Sales Tax

The High Court's decision affirming Sarawak's right to impose sales tax on petroleum product exports should be accepted by Petronas, according to state officials. The national oil and gas company is considered a taxable entity, and the Sarawak government's imposition of the tax is deemed to be within the scope of the Federal Constitution, supported by the Malaysia Agreement 1963 and the Inter-Government Committee Report.
State Government's Authority Upheld

Sarawak assistant law minister Datuk Sharifiah Hasidah Syeed Aman Ghazali stated that Petronas, as a taxable entity, should not appeal the High Court's ruling. She emphasized that the state legislative assembly possesses the constitutional right to levy such taxes, referencing the foundational agreements of Malaysia. The High Court Judge Azhahari Kamal Ramli dismissed Petronas's judicial review application, confirming that the Comptroller of the State Sales Tax acted lawfully in assessing the tax on Petronas, particularly as the company had not submitted returns, asserting it was not a taxable person.
Call for Payment Without Delay

Following the High Court's decision, Sarawak DAP chairman Chong Chieng Jen congratulated the state government and urged Petronas to make the payment of the sales tax without delay. He advised against an appeal to the Court of Appeal, stressing that matters rightfully belonging to Sarawak should be accorded accordingly. The ruling implies that the notices of assessment issued by the comptroller were legally valid, given Petronas's stance and failure to comply with return submissions.
Legal Basis for State Taxation

The legal framework supporting Sarawak's claim to impose sales tax on petroleum exports is rooted in constitutional provisions and historical agreements. The Malaysia Agreement 1963 and the subsequent Inter-Government Committee Report are cited as the basis for the state's authority to annex laws and impose taxes. This judicial affirmation reinforces the state's fiscal autonomy in areas pertinent to its natural resources, as interpreted by the High Court.

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Should Petronas accept the High Court ruling on Sarawak sales tax?

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