Indonesia lowers tax threshold on palm oil exports

Indonesia has lowered the crude palm oil (CPO) reference price brackets that trigger incremental export taxes on palm oil products by $70/t from 8 August, according to a finance ministry regulation.

Palm oil products are now subject to the lowest band of export taxes when the CPO reference price falls below $680/t, down from the previous $750/t minimum threshold implemented in June. Tax rates still rise with every $50/t increase in the CPO reference price but up to a maximum of $1,430/t, down from $1,500/t under the previous tax structure.

Export tax increments have remained the same on all products as under the previous regulation, even though the reference price that triggers each bracket has moved lower. Export duties range from $3-288/t on CPO, from $2-192/t on refined, bleached and deodorised (RBD) palm olein, $3-13/t on palm kernel shells (PKS) and $32-105/t on biodiesel.

Indonesia's trade ministry updated its CPO reference price to $872.27/t, applicable from 9-15 August, in a separate regulation published on 8 August. The ministry has historically set the reference price monthly but has been considering more frequent adjustments in response to volatile palm oil markets.

The changes put the current export tax on CPO at $52/t, up from $33/t previously, while duties on exports of RBD olein will move up to $12/t from $2/t and on PKS to $6/t from $5/t. Biodiesel will continue to incur no export duty, as the reference price remains below the $930/t threshold that triggers the lowest rate on this product.

A separate levy Indonesia usually applies to exports to fund its domestic biodiesel and cooking oil sectors remains at zero across palm oil products, after being temporarily scrapped last month until 31 August in an effort to ease inflated inventories.

By Lauren Moffitt