KUALA LUMPUR: The Malaysian Palm Oil Board (MPOB) said on Dec 17 that the windfall profit tax on planters will only be imposed when the crude palm oil (CPO) prices surpass the threshold level set in 2009 and not when the prices are lower than that.
Effective Jan 1, 2020, a 3% windfall tax per tonne will be imposed on planters in the peninsula and 1.5% for CPO from Sabah and Sarawak.
“Both the Ministry of Primary Industries and MPOB will continue with the consultation process on the windfall profit tax and subsequently, initiate measures to ensure the continued competitiveness of the Malaysian oil palm industry,” MPOB said in a statement here.
It said the threshold appropriate calculation works out as follows:
= 3% x monthly FFB (fresh fruit bunches) production x (MPOB Malaysia monthly average CPO Price of more than RM2,500/tonne)
Sabah and Sarawak:
= 1.5% x monthly FFB production x (MPOB Malaysia Monthly Average CPO Price of more than RM3,000/tonne)
MPOB said the different threshold level and rate of calculation are due to the prevalence of “Sabah discount” and cost of production in Sabah and Sarawak.
The federal government introduced the windfall levy on CPO on July 1, 2008 to replace the Cooking Oil Price Stabilisation Scheme (COSS) that was started by MPOB.
In the initial stage of implementation, the levy was imposed on CPO and CPKO producers at the threshold level of RM2,000/tonne for both CPO and CPKO average price. At that point, the rate was set at 15% for Peninsular Malaysia and 7.5% for Sabah and Sarawak.
Since then, the government has revised the calculations and threshold levels.
Starting July 15, 2008, the levy was imposed on fresh fruit bunches (FFB) production, which replaced the levy on CPO and Crude Palm Kernel Oil production.
The new rate was 3% for Peninsular Malaysia and 1.5% for Sabah and Sarawak with the threshold CPO prices of RM2,000/tonne.
On March 10, 2009, the threshold was again revised and the smallholders (with less than 40.46ha) were exempted from paying the windfall levy.
The threshold level of RM2,500/tonne for Peninsular Malaysia and RM3,000/tonne for Sabah and Sarawak, and the rate of 3% for Peninsular Malaysia and 1.5% for Sabah and Sarawak remained unchanged until now. – Bernama