Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 30): The government currently has no plans to impose a windfall profit levy on rubber glove products which enjoyed exceptional gains following the surge in demand for rubber gloves worldwide in the wake of the Covid-19 pandemic, nor to other businesses which generated large profits during the global health crisis. 

In a written Parliamentary response to a question from Muar Member of Parliament Syed Saddiq Syed Abdul Rahman, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the windfall profit levy or levy on extraordinary profit is currently being charged only on palm oil fruit commodity which is based on the threshold value of the market price of crude palm oil (CPO) issued by the Malaysian Palm Oil Board (MPOB) on a monthly basis. 

“Although it is not subjected to extraordinary profit levy, the rubber glove manufacturing industry also contributed through spillover effects to the national economy — in terms of direct and indirect taxes especially with the corporate tax that has increased. 

“[This is] on top of being able to continue to provide employment opportunities during the Covid-19 crisis. The additional profits earned by the rubber glove manufacturing industry during the Covid-19 pandemic can also be used by the industry to continue re-invest and encourage investors to further expand their businesses in the country,” he said. 

Concerns over whether the government could be mulling the imposition of windfall tax came under the limelight recently after there was a mention of a second reading of the Windfall Profit Levy (Amendment) Bill 2020 in the Parliament Order Paper published on Sept 14, 2021. And that has frightened the corporate world and investing fraternity. The bill's first reading was conducted in December 2020.

In addition, it was said the government is contemplating and studying the implementation of a one-off higher tax rate to be imposed on companies that have generated extraordinary profits during the Covid-19 pandemic.

Deputy Finance Minister II Yamani Hafez Musa, who spoke in Parliament on Sept 22, 2021, added that Putrajaya is also studying the implementation of a capital gains tax, which was proposed by several members of Parliament (MPs) during the latest parliamentary sitting as part of efforts to replenish government funds spent on combating the Covid-19 pandemic.

Meanwhile, Tengku Zafrul revealed that the government has collected RM588 million in proceeds under the extraordinary profit levy from the palm oil sector for the period between January to June this year. The figure is observed to be higher than RM209 million collected for the year 2020. 

The significant increase in levy revenue for this year, he said, was due to the spike in the average monthly price of CPO in the market which was influenced by various factors — including low palm oil stocks, reduced CPO productions and increased exports for local palm oil products.

“[The] levy collection is expected to continue to increase in the second half period of this year given the ongoing increase in monthly average CPO prices,” Tengku Zafrul added.  

He said this in a written Parliamentary response to a question from Sarikei Member of Parliament Wong Ling Biu, who requested the finance minister to state how much windfall tax has been collected by the government from the palm oil sector in the last two years. 

For more Parliament stories, click here.

Edited BySurin Murugiah
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