Sabah may appoint an independent assessor to determine its 40% federal revenue entitlement if negotiations with Putrajaya remain unresolved by the next Malaysia Agreement 1963 (MA63) technical committee meeting on June 30.

Sabah has set the June 30 session of the MA63 Implementation Action Council Technical Committee (JKTPA-MA63) on a decision on the revenue entitlement after 13 unanswered requests for federal tax data. 

Finance Minister Datuk Seri Masidi Manjun told the State Assembly that while no formal dispute has been declared between the two parties, prolonged deadlock can be the trigger point for a third-party arbitration.

“There has not been an official disagreement over the figures, but if no consensus is reached by end-June, we will have no choice but to proceed with the appointment,” Masidi said during his ministerial winding-up speech on Wednesday. 

The 40% entitlement, guaranteed under Article 112C and the Tenth Schedule of the Federal Constitution, remains exclusive to Sabah and has not been recognised in practice for decades.

Either party are allowed to to refer a disagreement over special grants to an independent assessor if consensus cannot be reached through negotiations as stipulated under Article 112D(6) of the Federal Constitution.

Masidi said 13 formal requests had been made for the federal government to disclose actual tax revenue collected in Sabah, but none had received a response. 

He declined to reveal the state’s internal estimate, citing strategic reasons.

“The amount is significant, but not something we can disclose publicly while negotiations are ongoing,” he said when responding to questions from Datuk Darell Leiking (Moyog-Warisan). 

An interim RM600 million payment from the federal government—matched by an identical amount to Sarawak—was described as separate and not tied to the 40% claim.

Masidi said Sabah considers the constitutional provision non-negotiable and stressed that the appointment of an independent assessor would only proceed if both sides formally disagree on the figures submitted.

He added that efforts are ongoing to strengthen Sabah’s fiscal governance, including the introduction of a digital revenue tracking system, legal reforms to tighten the State Sales Tax framework, and joint enforcement operations with MACC, Customs, and other agencies. – April 16, 2025