KUALA LUMPUR: The Ministry of Plantation and Commodities (KPK) is submitting a request to the Ministry of Finance (MOF) for crude palm kernel oil (CPKO) and palm kernel olein to be exempted from the Sales and Services Tax (SST), both of which currently taxed at a rate of five per cent.
KPK Deputy Minister Chan Foong Hin said the ministry has reviewed feedback from its engagement sessions with industry players on the impact of the SST implementation.
“The exemption is reasonable as both are raw materials in the production of oleochemical products and not finished goods, which are subject to government tax.
“Proposals related to SST exemptions or relief for certain critical services essential to industry operations have also been considered to ease cost pressures,” he said during the question-and-answer session in the Dewan Rakyat today.
He said this in reply to a question from Teresa Kok Suh Sim (PH-Seputeh) on the impact of the SST expansion on the palm oil industry, particularly the downstream oleochemical sector.
To maintain the industry’s competitiveness in the international market, Chan said KPK’s efforts include the implementation of the Malaysian Sustainable Palm Oil (MSPO) certification scheme, development of traceability systems along the supply chain of oil palm products, and adoption of new technologies.
The ministry had also focused on strengthening research and innovation, diversifying higher value-added oil palm products, as well as trade promotion and diplomacy.
Chan added that KPK is still waiting for an official written confirmation from the MOF on the tax exemption for oleochemical raw materials, although the matter was verbally conveyed during an engagement session on July 15 with the Malaysian Palm Oil Association (MPOA), the Palm Oil Refiners Association of Malaysia (PORAM) and several other industry groups.
“MOF has verbally informed us that these materials are exempted, but we are still waiting for the official confirmation in black and white,” he said.
He said this in reply to Kok’s supplementary question on when the SST exemption for CPKO would be finalised, as well as the ministry’s policies and action plans to help the palm oil industry navigate challenging global markets such as the United States (US), and reduce reliance on crude palm oil exports.
On the US market, Chan noted that tariff rates had dropped to 19 per cent, but last year, Malaysia’s oil palm exports to the US only accounted for 1.1 per cent of its total palm oil exports.
“The US is not our main market. Nevertheless, to strengthen oil palm’s position globally, various measures are being taken, including MSPO certification and leveraging free trade agreements such as the Malaysia-UAE Comprehensive Economic Partnership Agreement and the Malaysia-EFTA Economic Partnership Agreement (MEPA),” he added. - Bernama
