Petronas needs to pay 5% sales tax to Sarawak – High Court

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By S. Harrish

IN a landmark decision today, the Kuching High Court ruled that Sarawak had the right under the Federal Constitution to impose sales tax on petroleum products.

With the ruling, Petronas will now be required to pay a five per cent State Sales Tax to Sarawak.

High Court Judge Azahari Kamal Ramli made the ruling when dismissing a leave application for judicial review by Petronas to declare the Sarawak state sales tax null and void.

According to FreeMalaysiaToday, Petronas had claimed that some parts of the state’s Sales Tax Ordinance 1998 were unconstitutional.

However, Azahari said the power of the state to make laws for imposing the sales tax derives from Article 95B (3) of the constitution.

Sarawak legal counsel JC Fong said he hoped Petronas would accept the decision instead of appealing against it.

Sarawak Assistant Minister for Law, State-Federal Relations and Project Monitoring Datuk Sharifah Hasidah Sayeed Aman Ghazali described the High Court decision as a “good victory” for the state.

“We hope Petronas will pay us the sales tax. This is our constitutional right.

“We have every right under the constitution, Malaysia Agreement 1963 and Inter-Governmental Committee Report to impose the sales tax (on petroleum products),” she said.