KUALA LUMPUR: The Malaysian Estate Owners’ Association (MEOA) wants the government to either suspend or abolish what it perceived as “unfair” taxes on the palm oil industry.
In a statement on Monday, it cited the windfall profit levy (WPL) on crude palm oil (CPO); 7.5% sales taxes in Sabah on sales of CPO; and 5% sales taxes in Sarawak on sales of CPO and crude palm kernel oil (CPKO).
“Collectively, they amounted to an estimated RM1.3bil in 2019 when CPO prices were low, averaging RM2,079 per tonne.
“Based on 2019 production numbers and assuming CPO price sustains at RM3,200 per tonne, MEOA expects these taxes could balloon to RM2.8bil a year, ” it said.
The MEOA said the Windfall Profit Levy Act 1998 came into force on Jan 1,1999, and it was applied only on the oil palm industry.
Imposition of the levy was suspended several years later after the country’s economy began recovering from the debilitating effects of the Asian Financial Crisis.
However, it was revived in 2008. Today, it is imposed in Peninsular Malaysia whenever CPO prices exceed RM2,500 per tonne; and in Sabah and Sarawak when CPO prices exceed RM3,000 per tonne.
The MEOA noted that the Finance Minister has been quoted by the press on Nov 28 as saying that imposition of windfall profit levy on glove manufacturers would make investors think twice before investing in the country.
“We therefore ask whether the Finance Minister will expand this policy thinking to also exempt the palm oil industry from this tax.
“It should be pointed out that no oil palm planter will be rejoicing endlessly with today’s palm oil prices, given the cumulative effect of relentless cost increases over the years.
“Today’s derived margin set against many years of unabated production cost increases is certainly not windfall profits, ” it pointed out.
Instead, the MEOA pointed out the oil palm industry is a long-haul business and the growers need to recoup and reinvest for the industry to be competitive and remain sustainable.
At CPO price of RM3,200 per tonne, MEOA estimates WPL collections to be RM760mil a year.
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