National water agency PUB is not obliged to pay land assessment tax on its Johor River Waterworks, Foreign Minister K. Shanmugam told Parliament yesterday.
This is because PUB's operations in Johor are governed by the 1962 Water Agreement, which governs what PUB has to pay, he said.
He was responding to a question by Mr Sitoh Yih Pin (Potong Pasir), who had asked about the status of the tax, which the Kota Tinggi District Council had sought to impose, and whether there had been any recent developments.
PUB owns Johor River Waterworks, located in the Kota Tinggi district of Johor. It extracts and treats water from the Johor River, in accordance with the 1962 Water Agreement. This agreement is valid till 2061 and is guaranteed by the governments of Singapore and Malaysia in the 1965 Separation Agreement.
Mr Shanmugam said that late last year, the Kota Tinggi District Council issued a notice which sought to double the rate of land assessment tax imposed on Waterworks. "The revised rate was more than double that of the next highest rate in the entire Kota Tinggi district. The Waterworks' assessed property value was also increased. The new rate was applied to a category which was created solely for the PUB," he said.
He noted that under the 1962 Water Agreement, PUB is not obliged to pay the tax. The agreement gives Singapore the right to draw water from Johor River up to 250 million gallons per day, or 1.14 million cubic m a day, with Johor entitled to a daily supply of treated water in return.
"There is some additional background on the Johor authorities imposing such taxes, in the past," he said. "I do not propose to go into what had happened in the past."
With regard to the latest tax assessments, Singapore has registered its concerns with Malaysia's Ministry of Foreign Affairs through two Third Person Notes.
PUB has also got in touch with the Kota Tinggi District Council.
Mr Shanmugam told MPs he had raised the issue directly with his Malaysian counterpart Anifah Aman twice - in April and on Aug 4.
Prime Minister Lee Hsien Loong had also spoken to Malaysian Prime Minister Najib Razak on the subject when they met in May.
Mr Shanmugam said: "Malaysia is aware that the issue of PUB's rights under the Water Agreement is critical and sensitive for us.
"The Malaysian Federal Government has guaranteed in the Separation Agreement that Johor would abide by the 1962 Water Agreement. The agreement does not require a payment of this land tax."
Singapore has requested Malaysia to address the issue.
"The Federal Government has indicated that it would work with the Johor State Government to address our concerns," he said.
This article was first published on Aug 19, 2015. Get a copy of The Straits Times or go to straitstimes.com for more stories.