top of page

Levy is imposed when CPO prices surpass threshold level

The Malaysia Palm Oil Board (MPOB) has clarified misconceptions about the windfall profit tax on palm oil.In a statement, issued in response to recent statements made by industry players, which involved inaccurate information about the tax, MPOB noted that the government had first introduced the windfall levy on palm oil on July 1,2008.

“However, the levy is only imposed when the CPO prices surpass the threshold level, ”

The levy, it said, was implemented to replace the Cooking Oil Price Stabilisation Scheme (COSS) which was earlier initiated by the MPOB.

At the initial stage of implementation, the levy was imposed on the CPO and crude palm kernel oil (CPKO) producers at the threshold level of RM2,000 per tonne for the average price of both products.

At the time, the rate was set at 15% for Peninsular Malaysia and 7.5% for Sabah and Sarawak.

The government made revisions to the levy, and from July 15,2008, the levy was imposed on the production of fresh fruit bunches instead of on CPO and CPKO production.

The rate was also revised to 3% for Peninsula Malaysia and 1.5% for Sabah and Sarawak, with a CPO price threshold of RM2,000/tonne.

On March 10, the following year, the threshold was again revised and smallholders (with area less than 100 acres or 40.46ha) were exempted from paying the windfall levy. According to MPOB, the threshold level of RM2,500 per tonne and RM3,000 per tonne, as well as the 3% and 1.5% rates for Peninsular Malaysia and Sabah and Sarawak respectively has remained unchanged.“It is true that the windfall profit is an additional levy for the Malaysian oil palm industry.

“However, the levy is only imposed when the CPO prices surpass the threshold level, ” it said, adding that the tax is no longer collected when CPO prices fall below the threshold level.

The MPOB said the Ministry of Primary Industries and MPOB would continue with its engagement with industry players on the issues relating to the windfall tax, and subsequently initiate measures to ensure the continued competitiveness of the Malaysian oil palm industry.

Several groups including the Malaysian Palm Oil Association have recently called for the government to suspend the windfall tax.


bottom of page