Sabah State Legislative Assembly Passes Three Bills to Strengthen Fiscal Governance and Environmental Conservation

Strategic Insights -

The Sabah State Legislative Assembly has passed three Bills to tighten the management of state sales tax, degazette forest reserves for development, and introduce new laws to regulate the carbon credit industry. The new laws aim to strengthen fiscal governance, improve tax administration, and ensure continued sustainable revenue for the state. The Bills will also introduce new laws to regulate the carbon credit industry, establish a carbon governance framework, and promote inclusive climate action.

Key Takeaways:

  • The three Bills aim to strengthen fiscal governance, improve tax administration, and ensure continued sustainable revenue for the state.
  • The amendments to the State Sales Tax Enactment 1998 introduce 37 changes, including expanding the definition of 'sale', criminalising unlicensed sales, and allowing taxpayers to appeal to an Appeal Board or tribunal.
  • The number of items taxed under the State Sales Tax has increased from three in 2018 to nine in 2025, including petroleum products, fishery commodities, scrap metal, and locally mined gold and silver.
  • As of June 2025, total collections since the inception of the sales tax stood at RM32.26 billion, with 386 licensed taxpayers contributing an average of RM250 million monthly.
  • The Forest Enactment (Amendment) 2025 Bill proposes the degazettement of 16,728.9 hectares from 10 forest reserves to formalise 40 rural villages and support local infrastructure and livelihoods.
  • The degazetted forest classes include Class I (Protection), Class II (Commercial), Class IV (Amenity), Class V (Mangrove), and Class VI (Virgin Jungle Reserve).
  • The Climate Change and Carbon Governance Enactment 2025 is the first legislation of its kind in Malaysia, establishing a full carbon governance framework and promoting inclusive climate action.

Statistics:

  • State sales tax revenue has grown from RM89 million or 7% of state revenue in 1999 to RM3.03 billion or 44.5% in 2024.
  • The number of items taxed under the State Sales Tax has increased from three in 2018 to nine in 2025, including petroleum products, fishery commodities, scrap metal, and locally mined gold and silver.
  • As of June 2025, total collections since the inception of the sales tax stood at RM32.26 billion, with 386 licensed taxpayers contributing an average of RM250 million monthly.
  • The degazetted forest areas will benefit over 12,000 residents and will be replaced with equally sized reserves to uphold the state's conservation commitments.

Sources:

  • [Masidi Manjun, Finance Minister of Sabah]
  • [State Sales Tax Enactment 1998]
  • [Forest Enactment (Amendment) 2025 Bill]
  • [Climate Change and Carbon Governance Enactment 2025]
  • [Datuk Nizam Abu Bakar Titingan, Assistant Minister in the Chief Minister's Department]
  • [Datuk Abidin Madingkir, Assistant Minister]