KUALA LUMPUR (July 19): Hibiscus Petroleum Bhd said it is committed to resolve the tax issues with the Sabah authorities in an amicable and collaborative manner, and will ensure minimal disruptions to its operations in the state.
The oil and gas service provider was responding to a statement by Sabah's finance minister on Tuesday (July 19) that state authorities are looking to cancel the work permits for Hibiscus' two oil units operating in that state if they do not settle the state sales tax (SST) and penalties owed within the stipulated deadline.
In a filing with Bursa Malaysia, Hibiscus also clarified that its representatives are in ongoing engagement with Sabah officials with the objective of clarifying the issue of the applicability of SST to the companies.
“It is and has always been our group’s policy to pay all taxes when legally due and payable," the group said. “However, the companies will take appropriate action to safeguard their legal rights and interests accordingly where they are constrained to do so.”
Hibiscus said its tax legal advisor has advised that the crude petroleum oils and natural gas it sold is not legally liable for SST.
The two subsidiaries, Repsol Oil & Gas Ltd and SEA Hibiscus Sdn Bhd, had refused to make payment after contesting that it sold its crude oil entitlement from the Kinabalu Oil Field at the Labuan Crude Oil Terminal facility “outside the sovereignty and jurisdiction of the state of Sabah” and hence should not be charged the SST.
Malay Mail Online reported on Tuesday that a notice of action has been issued to Hibiscus’ units on July 8 after a grace period of one week to settle the arrears.
“We issued a notice on July 8 to say that all working passes will be cancelled on Oct 1, 2022 if payment is not settled,” Sabah Finance Minister II Datuk Masidi Manjun was quoted as saying at the Sabah state legislative assembly.
Masidi said several engagements have taken place between the two parties to settle their disagreements, with the state demanding some RM97.31 million, comprising RM66 million in SST and RM31.31 million in penalty incurred for late payment.
“We sent the payment notice on June 22, with dues to be settled within 30 days of notice or the state will initiate civil action against them.
“On July 1, they had asked for a grace period of one week to negotiate terms with Petronas,” he was quoted as saying.
Shares in Hibiscus Petroleum closed five sen or 5.62% lower at 84 sen on Tuesday, giving the group a market capitalisation of RM1.69 billion.