SAPP: No excuse to delay returning the 40% tax revenue of at least RM2.0 billion per annum

By: Datuk Yong Teck Lee, President of SAPP. 

 As proudly announced by the CEO of Lembaga Hasil Dalam Negeri Malaysia (Inland Revenue Board), in the year 2024, LHDN Sabah collected RM5.7 billion in taxes from Sabah. The LHDN CEO also confidently announced that LHDN targets tax revenues of RM6.2 billion for this year 2025. This means an average of RM6 billion in taxes from Sabah per year for 2024 and 2025 alone. 

It is not rocket science that 40% of that RM6 billion tax revenues is RM2.4 billion. This RM6 billion tax revenues EXCLUDES other tax revenues collected by the Customs Department and other federal agencies in Sabah.

Yet Sabah has not received its rightful 40 per cent share of that revenue that Sabah is entitled to under the constitution.

There is absolutely no reason for the federal government to delay making annual payments of at least MR2 billion to the Sabah government.

Instead, Sabah is paid an interim amount of only RM600 million, which is a figure plucked from nowhere.

Why is DBKK playing federal tax collector role?

Now, as reported, Dewan Bandaraya Kota Kinabalu (DBKK) is assisting LHDN in hunting down hawkers labelled as "inactive" taxpayers. These hawkers and micro businesses are not major tax evaders. They are small, informal traders already battling rising costs, subsidy cuts, and declining purchasing power.

Enforcing tax compliance in this climate, while RM2 billion in Sabah’s share remains unreturned, only worsens economic fragility and damages local economic resilience.

DBKK must adjust its mindset. DBKK should stop aligning with federal LHDN enforcement while the billions owed to this region remain unpaid. DBKK should not contradicts it's role as a local government agency in uplifting livelihoods in Kota Kinabalu city.

We call on the federal government to honour the 40 per cent entitlement without further delay. Until then, tax enforcement in this region should be re-evaluated, paused if necessary, and guided by consultation with the Sabah government and Sabah business organisations. 

At the same time, DBKK should stop playing the role of federal tax collector to hunt down so-called inactive tax payers.