Malaysia: Petronas in talks to settle sales tax dispute with energy rich Malaysian state

  • Malaysian national oil company Petronas is in talks to finalise a deal with an energy rich province to settle a dispute over the payment of sales tax, a lawyer for the company said on 23 Jun 20.
  • Petronas had been fighting Sarawak state’s demand for the sales tax in court before the two parties announced a settlement in May 20, although Sarawak later said it would continue legal action until an agreement is final.
  • Reuters reported last week that the chief of Petronas quit in Jun 20 after a disagreement with Prime Minister Muhyiddin Yassin over the May 20 settlement, which would see Petronas pay out MYR2bn to Sarawak, run by a government ally.
  • In the federal court on 23 Jun 20, Petronas’ lawyers sought an adjournment of an earlier appeal against a lower court’s decision allowing the sales tax to be imposed, citing the off-court negotiations.
  • Petronas’ lawyer Malik Imtiaz Sarwar also said Petronas has given an undertaking to withdraw the appeal by 3 Aug 20.
  • Sarawak took Petronas to court in Nov 19, saying the national oil company was the only energy company operating in the state that had not paid a 5% sales tax imposed on 1 Jan 19.

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