Sabah working with MACC to claim sums owed in tax evasion cases

KOTA KINABALU: The Sabah government is pursuing unpaid taxes from companies involved in alleged cases of crude palm oil sales tax evasion. State Finance Minister Datuk Seri Masidi Manjun revealed that the government is collaborating with the Malaysian Anti-Corruption Commission (MACC) to recover these taxes. Masidi stated, “We have begun collecting the taxes, but I believe there are more cases, which is why we are working closely with the MACC.” He made these remarks after concluding the state Finance Ministry’s “Integrity Week” at Menara Kinabalu on Friday (Aug 18).

However, he also acknowledged that some companies have voluntarily settled their taxes without any intervention from the government. The Finance Ministry had issued Letters of Demand (LODs), but in certain cases, companies decided to pay their dues willingly. Masidi added, “We have implemented a voluntary scheme where payment made between now and the end of this year will not incur any penalties.”

In one particular case of tax evasion, an individual with a Datuk title and a former public servant was arrested in May last year for allegedly evading millions of ringgit in Sabah’s crude palm oil sales tax. This arrest came after the apprehension of two state government officials, including a retiree. On May 18, 2022, a senior official from the state Finance Ministry and a retired senior government officer were detained in connection with the case. They were suspected of accepting RM700,000 in bribes from a palm oil mill in Lahad Datu to ignore the mill’s falsification of the quantity of crude palm oil produced, enabling the evasion of state taxes amounting to approximately RM2 million per month since 2015.

Regarding the nature of the RM320.25 million fund promised by Putrajaya to address Sabah’s water supply problem, Masidi explained that it is considered an “interest-free loan.” However, he expressed hope that over time, the Federal Government would convert it into a grant. Deputy Chief Minister III Datuk Shahelmey Yahya previously stated that Prime Minister Datuk Seri Anwar Ibrahim indicated that the funds would be a soft loan, possibly at zero interest. In a statement after a meeting with Anwar on June 1, Chief Minister Datuk Seri Hajiji Noor expressed confidence that the Federal Government’s aid to Sabah would expedite short-term plans to resolve the state’s water issues.

Regarding the Sabah Special Trust Fund approved by the state assembly last week to hold unused federal funds, Masidi acknowledged that depositing these funds into the trust fund requires agreement from Putrajaya. He stated, “As I mentioned in the state assembly, it has not been finalized because we need the concurrence of the Federal Government. We need to make some adjustments to allow for its implementation. However, Sabah is ready. We have presented the necessary legislation and it has been approved to convey the message to the Federal Government that we are prepared to implement it whenever they are willing.”

Economy Minister Rafizi Ramli, during a visit to Sabah on June 27, remarked that the state’s trust fund proposal warrants a careful examination by the Finance Ministry since it involves not only financial aspects but also the potential effects on the federal projects system. The state assembly unanimously approved the establishment of the Sabah Special Trust Fund on August 9 as a means to hold annual federal development funds that can be withdrawn if unused.