Malaysia to raise taxes for oil palm transplants

Malaysia’s 2025 budget may include two key proposals for the plantation sector: a revision of the windfall profits tax on palm oil sales and an additional allocation for an oil palm re-planting program, reports Business Times.

According to Public Investment Bank, the windfall profits tax applies to palm kernel producers when crude palm oil (CPO) prices are between 3,000 and 3,500 ringgit per ton. The tax threshold may be raised to 4,500 ringgit given the rising cost of production.

The Palm Oil Association of Malaysia notes that 664,000 hectares, or about 12% of the area, is due for replanting as the palm trees there are over 25 years old. By 2027, more than a third of the planted area is expected to be classified as old, making it difficult to achieve the long-term yield level of 18 million tons. It is also reported that smallholders manage 1.5 million hectares of oil palm plantations and will need about 3.5 billion ringgit to replant old palm trees, to be allocated by the government.

The day before, the European Commission proposed to postpone the implementation of the EU Deforestation Regulation (EUDR) for 12 months, which could provide relief to global vegetable oil markets. The outlook for CPO remains neutral with an expected price of 3,800 ringgit ($900.47) per ton.

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Tags: Malaysia, palm oil