Sabah will pursue sales tax payment from oil firms, says Masidi

KOTA KINABALU – The Sabah government will pursue its constitutional and legislative rights to recover the state sales tax (SST) due for the sale of petroleum products from both Repsol Oil and Gas Ltd (Repsol) and Sea Hibiscus Sdn Bhd (Seah) in accordance with the State Sales Tax Enactment 1988. 

State Finance Minister II Datuk Seri Masidi Manjun said both firms – subsidiaries of Hibiscus Petroleum Bhd – had applied to the finance minister and were subsequently issued with the requisite licence as a “taxable person” pursuant to the State Sales Tax Regulations 1999.

“The state government therefore categorically refutes the alleged basis upon which Repsol and Seah are refusing to make payment of the SST, and has already demanded for payment of the same.

“There had been without prejudice discussions between the representatives of the parties in relation to this issue. 

“However, the matter has now reached an impasse and both companies remain liable and have a continuing obligation to make payment for the outstanding amounts of SST, including penalties,” he said when met at the closing ceremony of the Sabah Oil and Gas Conference here today. 

Masidi, who is also Sabah’s local government and housing minister, said the state government reserves its right to take any action deemed necessary within the powers, authority and jurisdiction of the state. 

In a bourse filing two days ago, Hibiscus Petroleum announced that its subsidiary Repsol has discontinued payment of the SST imposed by Sabah, after its appeal against the tax was met with no response from the Sabah finance minister. 

The finance portfolio is held by Sabah Chief Minister Datuk Seri Hajiji Noor. 

Meanwhile, the firm also said that its subsidiary Seah has not been paying the SST at all.

Repsol had stated in September 2020 that it sold its crude oil entitlement from the Kinabalu oil field at the Labuan Crude Oil Terminal (LCOT) facility, which is out of the state’s jurisdiction and, therefore, does not need to pay the SST.

This refers to 350,236 barrels of oil produced by Repsol in the Kinabalu oil field – the first Repsol cargo sold from LCOT since Hibiscus Petroleum completed the acquisition of Repsol’s parent company Fortuna International Petroleum Corp in January 2022. – The Vibes, June 10, 2022