KUCHING, Nov 8 — A total of 15 associations affiliated with the palm oil supply chain have appealed to the federal government to immediately review and reconsider its windfall profit levy on the commodity post the Budget 2024 announcement.In a joint statement, the associations said they jointly seek a fair and balanced approach on the WPL that considers the industry’s present sectorial challenges and the pivotal need for long-term competitiveness and sustainability.
Commodity palm oil finds itself in a distinctive different position in the marketplace — it’s a price taker rather than a price maker. The associations said it stands to reason that the WPL threshold for triggering this levy should be reviewed to be set higher, especially considering today’s realities and to address the wrong notion that the planters have unceasingly been making windfall profits since its inception in 1999.
In Sabah and Sarawak, it is three per cent times monthly FFB production times MPOB Malaysia monthly average CPO price of more than RM3,500 per tonne. “We implore on the government to pursue to completion a long-overdue taxation review initiated some years ago,” the associations said. “They are not objecting to the WPL, but if it is imposed, they want to look at how the levy can benefit the industry, including in terms of incentives and programmes such as oil palm replanting,” Fadillah said.
This revision has led to a scenario where Sabah and Sarawak planters end up paying higher WPL than before when the CPO prices exceed RM4,000 pmt when it is added to their prevailing 5 per cent and 7.5 per cent state sales taxes in Sabah and Sarawak respectively.
This term universally refers to a one-off tax on excess profits, closely aligned with descriptions like “a piece of unexpected good fortune” or a tax applied in response to extraordinary historical events, and not as a routine policy tool, the associations stressed.
This inequity may have arisen because palm oil producers lack the option of relocating their operations overseas unlike other sectors. The associations implored the government to consider the review on the WPL levied on Palm Oil B; raise the WPL’s effective Price Threshold for Palm Oil and; revert the WPL Levy Rate for Sabah and Sarawak planters.
However, along with this, the Windfall Profits Levy Bill 2023 was also approved with the intention to indemnify the government for imposing a WPL on palm oil producers from Jan 1, 1999 to Jan 31, 2023, despite the levy orders not being in compliance with the Windfall Profit Levy Act 1998.