Revisit CPO sales tax imposed on palm oil planters, Sabah told

5 Dec 2021

By Wartawan Nabalu News

KOTA KINABALU: DAP’s Kota Kinabalu MP has called upon the Sabah Government led by Chief Minister Datuk Seri Hajiji Noor to revisit the rate of Crude Palm Oil (CPO) sales tax imposed on palm oil planters in Sabah.

He said is currently fixed at 7.5 per cent after a threshold of RM1,500 per tonne and that besides Sarawak, no other states in Malaysia have this tax.

Chan said he made this call as the government has collected RM177.88 million for 2020 and RM1.07 billion from January up to August this year 2021 in sales tax on petroleum products from Petronas with payment to continue in the foreseeable future.

Besides that, he mentioned that the Federal Government will be doubling the rate of Windfall Profit Levy on fresh fruit bunch (FFB) production in Sabah from 1.5 per cent previously to 3 per cent from 2022 onwards.

He added that the call is also made as the Sabah Government has announced a RM110.68 million surplus budget for Sabah in 2022.

“The oil palm industry is now no longer a golden crop industry. The biggest concern is the rising cost of production - production cost was approximately RM80 for one MT of Fresh Fruit Bunche (FFB) back in 2008, but this has jumped almost four times to over RM250-RM300 per MT today.

“In Sabah, palm oil planters face additional challenges as compared to their counterparts in Peninsula Malaysia, namely infrastructure challenges such as poor road connectivity, water and electrical issues, lack of local experts and other problems such as labour shortage.

“We must not allow this industry to be killed by the continuation of excessive taxation. What for Sabah Government keep surplus state budget if the palm oil industry continues to suffer?“ he said in a statement today.

Since the federal government has standardized the windfall tax levy for whole country, Chan urged for the CPO Sales Tax to, at the very least, be standardized between Sabah and Sarawak.

It is now Sarawak 5 per cent but Sabah 7.5 per cent, so let’s lower the CPO sales tax in Sabah to 5 per cent just like in Sarawak, he added.

“In addition, the current threshold of RM1,500.00 is low. I urge the Sabah Government to raise the threshold to RM2,500.00. For example if the CPO price is below RM2,500 then the sales tax should be 0 per cent.

“I would further suggest that if the CPO price is between RM2,500.00 to RM3,500.00, then the sales tax can be fixed at 2.5 per cent. Only if the CPO price is above RM3,500.00 then the maximum of 5 per cent be imposed.

“This would certainly help with the rising cost of production and is fairer to planters who have to work hard and toil the lands with physical labour,” he asserted.

Chan also mentioned that at the current rate and threshold, RM798.57 million in Crude Palm Oil (CPO) sales tax were added to Sabah’s coffers in 2019.

With the payment of Sales Tax for Petroleum products to the Sabah government by Petronas well above this amount, he asserted that there is no need for the Sabah government to worry about revenue loss.

“Since the Sabah Government can now extract more revenue from the federal government via the Petroleum sales tax, it’s time for them to be more concerned about our local Sabahan palm oil planters.”