KOTA KINABALU: Oil and gas companies will face termination and cancellation of working passes to operate in Sabah should they default in paying the state sales tax to the government.
State Finance Minister II Datuk Seri Masidi Manjun said such an action would take effect on Oct 1.
He was replying to appointed assemblyman Datuk Yong Teck Lee's additional question on the action taken against two companies, Repsol Oil and Gas Ltd (Repsol) and SEA Hibiscus Sdn Bhd (SEAH), which refused to pay the state sales tax (SST).
Masidi, who is also state Local Government and Housing minister, said following the payment refusal statement of Hibiscus Petroleum Bhd for its subsidiaries Repsol and SEAH, a series of actions were taken to recover those payments.
Between June 8 and July 8, the state government had issued several notices and held meetings with Petroliam Nasional Bhd (Petronas) and the companies.
"On June 21, 2022, the SST director had issued an assessment notice to the companies to claim tax arrears and penalty of RM97.31 million, which is RM65.65 million in sales tax and a penalty of RM31.66 million.
"It has to be fully settled within 30 days of the letter being issued. Otherwise civil action will be taken by the state government," he said, adding that the companies had made an appeal and sought a grace period.
Masidi said on July 8, the state government issued an ultimatum to the companies to halt their operations in Sabah should no payment be made.
Earlier, during the state assembly sitting's question-and-answer session, Yong had asked what action had been taken by the state government to collect the SST under the State Sales Tax Enactment 1958 for the oil and gas sector and the projection of sales tax collection.
Masidi said for this year, the state estimates RM1.1 billion from sales tax revenue from petroleum.
"As of June 30, the state government has collected RM808 million or 73 per cent of the estimate. This makes the total amount of sales tax collection on petroleum products, since it was implemented on April 1, 2020 until June 30, 2022, at RM2.458 billion."
He added that in an effort to expand resources and increase the state's revenue, two more petroleum products will be subject to state sales tax starting Aug 1 this year.
The products are ammonia and urea which are estimated to contribute a total of RM46 million in revenue this year.