PETALING JAYA: A revision in the newly imposed crude palm oil (CPO) windfall tax on plantation companies is inevitable, especially with the sharp correction in CPO prices on speculation that crude oil is likely to trend below US$100 per barrel for the rest of this year.
An immediate outcome of the potential revision will be the quantum of the revision itself, which will be decided by the Finance Ministry.
Yesterday, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui was quoted as saying: “The Treasury may have to look at it (CPO windfall tax) in that sense, and see whether there is a need to either revise or do something about the collection.”
He also said palm oil futures could decline to less than RM2,425 per tonne if crude oil fell below $100 a barrel.
While abolishing the CPO windfall tax would not be on the cards, analysts contacted by StarBiz said the revision could go one of two ways – imposing higher or lower levies on the oil palm planters.
The option for lower tax could be in the form of adjusting the current CPO threshold price of RM2,000 per tonne under the windfall tax higher to RM2,300-RM2,500 per tonne.
An analyst said: “The Government is not willing to forego the sizeable collection from the CPO windfall tax to help subsidise the cooking oil sector and curb food inflation after the recent abolishment of cess in the Cooking Oil Stabilisation Scheme.”
However, as palm oil prices continue their decline, the Government would be collecting less windfall tax from planters.
This could affect the retail price of cooking oil as the windfall levy would not be sufficient to subsidise the cooking oil manufacturers.
Oil palm planters had recently called for a higher CPO threshold price at RM2,500 to RM2,700 per tonne under the windfall tax.
This is given the lower CPO prices following corrections in the price of crude oil and most global commodities.
The Malayan Edible Oil Manufacturers Association had also requested that the cooking oil subsidy be revised to RM2,300 per tonne of refined bleached deodorised palm olein, from RM1,700 a tonne now.