Putrajaya banks on Petronas’s RM30b special dividend next year to refund taxpayers

KUALA LUMPUR, Nov 2 ― State-owned oil and gas giant Petroliam Nasional Bhd (Petronas) will be contributing a one-off RM30 billion special dividend to Putrajaya next year, in order to settle the RM37 billion outstanding tax refunds left behind by the previous Barisan Nasional administration.

In the Fiscal Outlook 2019 report released today, the new Pakatan Harapan (PH) federal administration said the remaining RM7 billion of outstanding refunds will be covered by savings in government spending.

Including the special dividend, Petronas will contribute RM54 billion in total next year.

“The source to fund the special dividend will be from the accumulated retained earnings of Petronas,” said the report.

“The usage of the earnings will not affect the funding of their current investment activities as the fund for the activities has been accounted in their capital expenditure plan.”

Finance Minister Lim Guan Eng promised in August that the PH government is committed to returning the Goods and Services Tax (GST) refunds next year, that it said were improperly or even “illegally” withheld by the previous government.

Of the RM37 billion still outstanding, RM19 billion is for GST refunds, while the rest for is for income tax refunds.

This comes as Putrajaya is expected to rely more on petroleum-related revenue this year and next year, compared to 2017.

Oil contributed to 21.7 per cent of total revenue this year, compared to just 15.7 per cent last year and just 14.6 per cent in 2016.

Next year, it is predicted to jump up to 30.9 per cent of total revenue. But without the special dividend, the value is estimated at 19.5 per cent.

However, Putrajaya said petroleum-related revenue will still be make up a lower portion than the annual average of 34.6 per cent recorded between 2009 and 2014.

Claiming that Putrajaya's source of revenue remain fairly diversified, it said the government is expected to increase non-petroleum revenue from tax reform initiatives.

This comes as collection from GST and its replacement Sales and Services Tax (SST) fell from 20.1 per cent in 2017 and 19.4 per cent in 2016, to just 9.8 per cent in 2018 and expected to be lesser at 8.4 per cent next year.

In September, Petronas announced that it will increase its dividend payment by 50 per cent to RM24 billion this year from RM16 billion in 2017, thanks to strong and sustainable crude oil prices. It was the biggest dividend since 2015, when Putrajaya received RM26 billion then.