The Malaysian Palm Oil Association (MPOA) said on Thursday this was a matter of grave concern to the industry, particularly the smallholders.
MPOA chief executive Datuk Nageeb Wahab, who is also chairman of FELCRA, said the sales tax on FFB would impact the entire value chain of the palm oil industry, particularly the smallholders as there will be a 5% increase in cost at every stage.
“We would also like to highlight that previously there was no GST charged to FFB. Based on the average FFB price of RM460 per tonne for September 2018 (MPOB, Grade A average for Malaysia), the sales tax on FFB is RM23 per tonne.
“The palm oil mills in the country received a total of 101.74 million tonnes of FFB in 2017. This would translate to a total sales tax of RM2.34bil,” he said.
Nageeb said the industry was heavily burdened by cesses, levies and taxes, including the corporate tax.
With the anticipation that end-December 2018 palm oil stocks will hit a record of three to 3.3 million tonnes, this would further dampen the current low palm oil prices, which are anticipated to remain until early 2019.
“The imposition of the sales tax on FFB will therefore further increase the cost of production and erode the competitiveness of Malaysian palm oil in the international oils and fats market,” he said.
Nageeb said that MPOA had highlighted this matter to the Minister of Primary Industries and has, together with the National Association of Smallholders (NASH), written to the Ministry of Finance to appeal for the exemption of the sales tax on FFB.