SUBANG lawmaker Wong Chen today asked Finance Minister Tengku Zafrul Tengku Abdul Aziz if windfall taxes for the palm oil sector will be removed to provide an equal deal for all companies.

“I agree with the finance minister that a windfall tax will do more harm than good to investors, the market and the overall economy,” he said in a statement today.

“However, he (Tengku Zafrul) is wrong to say that not one country in the region has a windfall tax, because this country, Malaysia, has a windfall tax on palm oil.

“While I appreciate his overall position against windfall tax, I have to ask whether he will expand this policy, to remove windfall tax on the palm oil sector?”

Growers in the peninsula are subjected to a windfall tax if palm oil prices exceed RM2,500 per tonne while planters in Sabah and Sarawak are taxed if the price crosses RM3,000 per tonne.

Wong said the sector is currently facing issues with production although palm oil prices are good, due to the shortage of foreign labour.

He, therefore, urged Tengku Zafrul to provide an equal deal to all companies operating in Malaysia, to facilitate a consistent investment and tax environment. 

“In the matter of any attempt to tax extraordinary profits, there is only a limited ‘solution’ and it does not actually lie in introducing a new tax,” he said.

A new tax regime will scare away investors, impact on the share prices of affected companies negatively and erode investors’ confidence, he said.

The government could review and adjust the existing two-tier corporate tax system to capture some of extraordinary profits. 

However, the government should give these companies a two-year notice if this was to be implemented.

Tengku Zafrul said recently imposing a windfall tax on glove companies, which are making extraordinary profits due to the boom in demand during the Covid-19 pandemic, will send a  wrong signal to investors. – November 30, 2020.