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 are currently taxed at a rate of five percent. KPK Deputy Minister Chan Foong Hin mentioned that the ministry has assessed feedback from industry players regarding the impact of SST implementation.
According to BERNAMA News Agency, the exemption is considered reasonable since both CPKO and palm kernel olein are raw materials in oleochemical product production and not finished goods, which are typically subject to government tax. Proposals related to SST exemptions or relief for critical services essential to industry operations have also been considered to alleviate cost pressures, Chan stated during a session in the Dewan Rakyat.
Chan was responding to a query from Teresa Kok Suh Sim on the impact of SST expansion on the palm oil industry, especially the downstream oleochemical sector. To sustain the industry’s competitiveness globally, KPK’s initiatives include implementing the Malaysian Sustainable Palm Oil (MSPO) certification scheme, developing traceability systems along the oil palm products supply chain, and adopting new technologies.
The ministry also emphasizes strengthening research and innovation, diversifying higher value-added oil palm products, and focusing on trade promotion and diplomacy. Chan added that KPK is awaiting official written confirmation from the MOF regarding the tax exemption for oleochemical raw materials, although verbal confirmation was provided during a July 15 engagement session with industry groups.
In response to a supplementary question on finalizing the SST exemption for CPKO and the ministry’s strategies to assist the palm oil industry in challenging global markets and reducing reliance on crude palm oil exports, Chan noted the US market’s reduced tariff rates and Malaysia’s limited oil palm exports to the US. Measures like MSPO certification and leveraging free trade agreements are being utilized to strengthen the global position of Malaysian oil palm.