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Budget 2014: Planters Want Govt to Abolish Palm Oil Windfall Profit Tax
Budget 2014: Planters Want Govt to Abolish Palm Oil Windfall Profit Tax
24/10/2013 (The Star) - The plantation industry, one of the heavily taxed sectors in Malaysia, is urging the Government to re-consider abolishing the palm oil windfall profit tax (WPT) under the proposed Budget 2014 to be tabled tomorrow.
Both the Malaysian Palm Oil Association (MPOA) and the Malaysian Estate Owners Association (MEOA) want the Government to “quickly do away” with the WPT, as plantation companies are already saddled with a series of tax, cess, levy as well as state government-imposed sales tax for oil palm planters in Sabah and Sarawak.
Planters claim that the total tax paid by the plantation sector had exceeded 46%, which is 20% more than the 26% corporate tax paid by most sectors of the economy.
MPOA chief executive officer Datuk Dr Makhdzir Mardan told StarBiz via e-mail that the WPT needed to be rescinded, given the current heavy tax exposure among plantation companies.
For peninsula-based oil palm plantation players, a 15% WPT is imposed when the CPO price threshold reaches RM2,500 per tonne and above.
For oil palm planters in Sabah and Sarawak, a 7.5% WPT is imposed when the CPO price hits RM3,000 per tonne and above.
The 130-member MPOA represents the private plantation sector including big companies such as Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, Felda Global Ventures Holdings Bhd and United Plantations Bhd.
Another MPOA Budget 2014 wish is for the Government to activate the investment reallocation for ICT infrastructure such as telecommunication towers in the oil palm plantations to enable precision agriculture with the goal of increasing plantation productivity while preserving resources.
In addition, tax breaks for investment in sustainability-related operation by oil palm millers should be introduced.
The MEOA, which also recommended for WPT to be abolished, said the Government instead could utilise the revenue from the palm oil export duties introduced since January this year to finance the Cooking Oil Subsidy Scheme.
MEOA, which represents smaller oil palm estate holdings in the country, said in a statement that the Government should allow the price of palm-based cooking oil to float in the open market and introduce cooking oil subsidy vouchers to the needy target group in its efforts to reduce the country’s budget deficit.
MEOA also suggested the Malaysian Palm Oil Board (MPOB) cess for research and development, marketing and promotion should be levied on a graduated scale indexed to the price of the commodity, instead of a fixed quantum practiced at present.
On labour shortage, the MEOA has called for a thorough study of the plantation industry requirement until 2020. “This is necessary if we are to achieve the targets set under the Economic Transformation Programme for the industry,” it added.
On mechanisation, greater financial incentives by way of seed capital, soft loan and tax breaks should be granted to the small and medium enterprises’ fabricating labour saving tools and mechanical equipment for the plantation industry.
In addition, the allocation for oil replanting grants should be increased to accelerate replanting of oil palms over 25 years old and palms yielding less than 15 tonnes of fresh fruit bunches per ha per annum affected by pests and diseases or other justifiable reasons.
Both the Malaysian Palm Oil Association (MPOA) and the Malaysian Estate Owners Association (MEOA) want the Government to “quickly do away” with the WPT, as plantation companies are already saddled with a series of tax, cess, levy as well as state government-imposed sales tax for oil palm planters in Sabah and Sarawak.
Planters claim that the total tax paid by the plantation sector had exceeded 46%, which is 20% more than the 26% corporate tax paid by most sectors of the economy.
MPOA chief executive officer Datuk Dr Makhdzir Mardan told StarBiz via e-mail that the WPT needed to be rescinded, given the current heavy tax exposure among plantation companies.
For peninsula-based oil palm plantation players, a 15% WPT is imposed when the CPO price threshold reaches RM2,500 per tonne and above.
For oil palm planters in Sabah and Sarawak, a 7.5% WPT is imposed when the CPO price hits RM3,000 per tonne and above.
The 130-member MPOA represents the private plantation sector including big companies such as Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, Felda Global Ventures Holdings Bhd and United Plantations Bhd.
Another MPOA Budget 2014 wish is for the Government to activate the investment reallocation for ICT infrastructure such as telecommunication towers in the oil palm plantations to enable precision agriculture with the goal of increasing plantation productivity while preserving resources.
In addition, tax breaks for investment in sustainability-related operation by oil palm millers should be introduced.
The MEOA, which also recommended for WPT to be abolished, said the Government instead could utilise the revenue from the palm oil export duties introduced since January this year to finance the Cooking Oil Subsidy Scheme.
MEOA, which represents smaller oil palm estate holdings in the country, said in a statement that the Government should allow the price of palm-based cooking oil to float in the open market and introduce cooking oil subsidy vouchers to the needy target group in its efforts to reduce the country’s budget deficit.
MEOA also suggested the Malaysian Palm Oil Board (MPOB) cess for research and development, marketing and promotion should be levied on a graduated scale indexed to the price of the commodity, instead of a fixed quantum practiced at present.
On labour shortage, the MEOA has called for a thorough study of the plantation industry requirement until 2020. “This is necessary if we are to achieve the targets set under the Economic Transformation Programme for the industry,” it added.
On mechanisation, greater financial incentives by way of seed capital, soft loan and tax breaks should be granted to the small and medium enterprises’ fabricating labour saving tools and mechanical equipment for the plantation industry.
In addition, the allocation for oil replanting grants should be increased to accelerate replanting of oil palms over 25 years old and palms yielding less than 15 tonnes of fresh fruit bunches per ha per annum affected by pests and diseases or other justifiable reasons.