(Updated)

Windfall tax bill passed by MPs; MoF says no plans to impose levy on glove companies

(Photo by Shahrin Yahya/The Edge filepix)

(Photo by Shahrin Yahya/The Edge filepix)

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KUALA LUMPUR (Oct 12): The Dewan Rakyat on Tuesday unanimously passed the Windfall Profit Levy (Amendment) Bill 2020.

The bill amends existing provisions under the Windfall Profit Levy Act 1998 (Act 592) and introduces new provisions.

Deputy Finance Minister II Mohd Shahar Abdullah said the amendments were aimed at improving the administration of the windfall profit levy through the provision of remission, refund of levies, as well as penalties that can benefit those who pay the levy.

He also stressed that the government has no plans to impose a windfall tax on companies making extraordinary profits during the Covid-19 period.

“We will not impose a windfall tax on companies such as rubber gloves manufacturers, particularly Top Glove [Corporation Bhd], which was specifically mentioned by several MPs,” said Mohd Shahar when wrapping up his ministerial replies on the amendment bill.

He pointed out that rubber glove companies made contributions of up to RM400 million to the disaster fund to help fight the pandemic.

Malaysia’s leading glove makers, namely Top Glove, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd, had contributed the RM400 million under Budget 2021.

The deputy minister also said that rubber glove companies generating lucrative profits created a "spillover" effect in the local economy in terms of taxes and job opportunities.

Several MPs had asked as to why the government chose to refrain from taxing companies such as rubber glove manufacturers that made large profits during the pandemic but continues to impose a windfall levy on palm oil companies.

Datuk Seri Ahmad Maslan (BN-Pontian) pointed out that Top Glove enjoyed an 11-fold increase in profits during the pandemic period. 

Mohd Shahar said the government did not make the decision to impose the windfall profit levy in haste, as it was always looking at the broad ecosystem of the commodity industry and companies in the country.

“The ministry will also consider various other proposals such as inheritance tax, capital gains tax, and tax on other commodities, and will not make any decision without holding engagement sessions,” he said.

Meanwhile, Deputy Finance Minister II Yamani Hafez Musa tabled two resolutions aimed at supporting the government’s economic stimulus packages and economic recovery plans, as well as development expenditure.

The first resolution was for the government to transfer RM16.5 billion from the balance of Malaysian Government Investment Issues (MGII) receipts from January to August 2021, to the Development Fund under Section 3(1) of the Government Funding Act 1983 (Act 275).

The second resolution was for the government to transfer RM7 billion from the balance of MGII receipts from January to August 2021 to the Covid-19 Fund under Section 3(1) of Act 275 and Section 4(2) of the Temporary Measures for Government Financing (Coronavirus Disease 2019 (Covid-19)) Act 2020 (Act 830).

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S Kanagaraju