Federal govt accepts Sabah’s constitutional 40% revenue share, will start immediate talks but appeals process flaws
PETALING JAYA: The federal government has decided not to appeal a High Court ruling affirming Sabah’s constitutional entitlement to 40% of revenue collected from the state, the Attorney General’s Chambers announced Tuesday.
The decision was made during a Special Cabinet meeting held on November 11, 2025, following the Kota Kinabalu High Court’s judgment on Sabah’s Special Grant in a judicial review application filed by the Sabah Law Society against the federal government.
The Attorney General’s Chambers confirmed that the federal government respects the principle of the Special Grant based on 40% of revenue as provided under the Federal Constitution.
Consequently, the government will immediately commence negotiations with the Sabah state government.
However, the federal government will appeal certain aspects of the judgment.
The Attorney-General highlighted defects in the court’s reasoning, including allegations that both federal and state governments had abused their powers and violated constitutional obligations dating back to 1974.
The judgment also declared that reviews conducted after 2021 were unlawful, irrational, procedurally irregular, and disproportionate.
As such the federal government will challenge these specific findings while accepting the core 40% revenue principle.
The landmark decision could have significant implications for federal-state fiscal arrangements and Sabah’s autonomy within Malaysia’s federal structure.
