Palm oil producers call for clarity over tax increase

The Malaysian estate owners' association (MEOA) is urging the national palm oil board (MPOB) to consult stakeholders and ensure transparency before raising its palm oil tax.

The MPOB cess order 2020 proposes raising levies that producers pay on crude palm oil (CPO) and crude palm kernel oil output by 5 ringgit/t ($1.23/t) from 1 January 2021. The MPOB collects 11 ringgit on each tonne produced for use in industry research and development (R&D), regulatory and promotional activities, as well as 2 ringgit/t for replanting and biofuels programmes, and 1 ringgit/t for environmental initiatives. Combined receipts from these taxes should exceed 300mn ringgit in 2020.

Additional funds accrued in 2021 will be funnelled towards essential mechanisation and automation R&D, according to the MPOB. But the industry requires clarity and input into specifics including fund management and allocation and how potential R&D projects will be prioritised, said the MEOA. The MPOB could also consider reallocating funds collected from the windfall profit levy – forecast to reach 760mn ringgit in 2020 on an average CPO price of 3,200 ringgit/t – towards mechanisation and automation research.

The public can submit feedback on the draft order until 30 November.

By Lauren Moffitt