Win-win tax formula
05/06/2008 (NST Online), Kuala Lumpur - Plantation companies may not grumble about being hit with a windfall tax because the government has also scrapped the cooking oil cess at the same time.
“Basically, a 15 per cent tax on CPO (crude palm oil) sales above the RM2,000 per tonne threshold works out to be a similar amount as the cooking oil cess,” an analyst said.
Based on a back-of-the-envelope calculation, the analyst said if a big planter in the peninsula had already paid RM200 million a year for cooking oil cess, the 15 per cent windfall tax amounted to nearly the same.
“But if the big planter is in Sabah or Sarawak and had paid RM200 million for cooking oil cess, then at 7.5 per cent windfall tax, it’ll only pay about RM100 million.”
The government yesterday said that the cooking oil cess, which had been in force since June 1 last year, would be replaced with a windfall tax of up to 15 per cent from July 1.
Smallholders, owning less than 40ha, who were exempted from paying the cess, would enjoy an exemption from the windfall tax.
Palm oil millers in the peninsula would have to pay a 15 per cent tax on crude palm oil sales above RM2,000 per tonne. Those in Sabah and Sarawak would only pay 7.5 per cent.
The Malaysian Palm Oil Board (MPOB) physical prices will be used as reference to calculate the windfall tax.
From July 1, the Finance Ministry will replace MPOB as the collection agency for the windfall tax. But the MPOB remains the agent to disburse cooking oil compensation to refiners and cooking oil manufacturers.
The MPOB will also continue to collect research and development cess from oil palm planters.
In the 12 months to May 31, the MPOB is estimated to have collected RM1.5 billion in cooking oil cess.
Consumers can rest assured that the price of palm-based cooking oil will remain the same. It is a price-controlled item.