At what crude palm oil price does the windfall profit levy apply in Peninsular Malaysia?

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Windfall Profit Levy Threshold in Peninsular Malaysia

The windfall profit levy in Peninsular Malaysia is triggered when the price of crude palm oil (CPO) reaches RM2,500 per tonne. This levy is a percentage of the palm oil sales revenue and is specifically applied when market prices exceed this threshold. For regions in Sabah and Sarawak, the threshold for the windfall profit levy is set higher, at RM3,000 per tonne.
Levy Application in Peninsular Malaysia

In Peninsular Malaysia, the windfall profit levy is implemented at a rate of three per cent. This specific tax measure is activated once the CPO price ascends to RM2,500 per tonne or more. This mechanism is designed to capture additional revenue for the government during periods of high commodity prices.
Differentiated Thresholds for Sabah and Sarawak

The application of the windfall profit levy differs between Peninsular Malaysia and the East Malaysian states of Sabah and Sarawak. In Sabah and Sarawak, the levy is only imposed when the CPO price reaches RM3,000 per tonne and above. A 1.5 per cent levy is applied in these regions when this higher price point is attained.
Potential Government Revenue

The implementation of the windfall profit levy is projected to contribute significantly to government revenue, particularly if CPO prices remain elevated. For instance, if CPO prices stabilise at RM3,000 per tonne through 2021, the government could potentially collect over RM500 million in levies. This revenue stream is considered an important contribution from the palm oil industry to the country's gross domestic product, especially amidst economic challenges.
CPO Stock Levels and Demand Influence

Factors such as rising foreign demand and low stock levels, such as being below 2.0 million tonnes, can contribute to the increase in palm oil prices. With stocks at approximately 1.6 million tonnes, these conditions can push prices towards and beyond the levy thresholds. The Malaysian Palm Oil Board (MPOB) chairman, Datuk Ahmad Jazlan Yaakub, indicated that palm oil prices might rise further due to sustained foreign demand.

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At what crude palm oil price does the windfall profit levy apply in Peninsular Malaysia?

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