KUALA LUMPUR (Oct 4): Hibiscus Petroleum Bhd, which had previously questioned the imposition of state sales tax (SST) on its two units operating in Sabah, has proceeded to pay the tax amounting to RM85.7 million.

The SST was imposed on revenues from petroleum products sold by SEA Hibiscus Sdn Bhd under the North Sabah production sharing contract (PSC) and Hibiscus Oil & Gas Malaysia Ltd (previously known as Repsol Oil & Gas Malaysia Ltd) under the 2012 Kinabalu Oil PSC.

"In order to create a stable environment for continuing investment and smooth operations in Sabah, SEA Hibiscus and Hibiscus Oil & Gas on Sept 21 proposed, without prejudice to their respective rights as applicable, to pay the claims imposed
by the Sabah state government," said Hibiscus.

The Sabah government accepted the proposal on Sept 27, the group added in a Bursa Malaysia filing on Tuesday (Oct 4).

"The group has made the appropriate accruals for all liabilities related to this matter in [financial year 2022] amounting to RM85.7 million," said Hibiscus.

SEA Hibiscus and Hibiscus Oil & Gas were previously informed by the state government that they were both liable for the SST on the basis that they were providing crude petroleum oils and natural gas from Sabah, which were deeemed as "taxable goods".

The two companies were also informed that all relevant work passes of the individuals employed by them and their respective contractors would be cancelled by Oct 1 if the SST was not paid by then.

SEA Hibiscus and Hibiscus Oil & Gas, however, insisted that under the Petroleum Development Act 1974, they "cannot and do not provide such taxable goods from Sabah", and were therefore not legally liable for the tax.

Hibiscus' shares rose 2.35% or two sen to close at 87 sen on Tuesday, valuing the oil and gas group at RM1.75 billion.