Penang To Pursue Petroleum Tax Despite Legal Hurdles

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Penang chief minister Chow Kon Yeow said laws should be enacted to enable the taxation of oil in the state’s waters. (Facebook pic)GEORGE TOWN: Penang chief minister Chow Kon Yeow today said he would press ahead with plans to pursue potential oil royalties despite scepticism over the practicality of imposing a Sarawak-inspired sales tax on the resource.
He said while former chief minister Lim Guan Eng had said that collecting a sales tax on oil was not possible, there was a need to enact laws to enable the taxation of oil in Penang’s waters.
“Although Air Putih says we have no right to impose sales tax on petroleum products, we cannot give up,” he told the state assembly, referring to Lim.
“If there is no enactment or ordinance (on a sales tax), it needs to be done, to reap benefits from the effort.”
Lim, a former finance minister, had said that Penang could not impose a sales tax on petroleum products like Sarawak.
He said Penang had no power to do so under the Federal Constitution, adding that his opinion was supported by the state legal adviser.
Chow previously said that Penang might consider emulating Sarawak in introducing a sales tax on petroleum products in the event that oil is found in its waters.
Chow said he had asked the state legal adviser to come up with a sales tax law similar to Sarawak’s and aim for a comparable RM4 billion petroleum product taxes.
Petronas recently said it was mapping the hydrocarbon potential of the Langkasuka Basin, which spans the waters of Perlis, Kedah and Penang.
In June, it was reported that Petronas and its subsidiaries had paid the Sarawak government RM1.2 billion in sales tax on petroleum products for the first quarter of 2023. - FMT

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