The report said Malaysia, the world’s second-largest palm oil producer, would set a tax rate for the export of CPO for January using the average sales price from Nov 10 to Dec 9 as the reference price, a level that analysts said could result in zero tax.
It said the new tax rate came under a plan approved in October to cut CPO export taxes as it tried to claw back market share from top producer Indonesia.
Under the new structure, January export taxes were likely be set at zero, given that the average CPO price from Nov 10 to Dec 9 fell below the lowest reference price of RM2,250 per tonne, it said.
The government will announce the tax levy on the 15th of every month using Malaysian Palm Oil Board’s (MPOB) prices for reference and will formalise the January tax in a gazette set to be issued on Dec 17.
The Plantation Index rose 34.39 points to close at 7,999.64 from 7,965.25 previously.
United Plantation’s share price rose by 44 sen to RM25.30 after hovering between RM24.78 and RM25.30 with 400 lots traded.
Kuala Lumpur Kepong gained 20 sen to RM21.58. It hovered between RM21.22 and RM21.68 throughout the day with 277,800 lots traded.
Meanwhile, Alliance Research Sdn Bhd said given that the MPOB’s CPO price average for the Nov 10 to Dec 9 period was below the RM2,250 per tonne reference price, the export tax on CPO starting January would most likely be zero.
With MPOB prices at RM2,050 per tonne as of yesterday’s close, it was generally believed that CPO prices were already net of tax, it said.
“We view that CPO prices are still slated to recover by January 2013 on the back of cooling production and improved exports which will reduce inventories.
“Being able to close the premium to Indonesian CPO prices starting next year will be beneficial for Malaysian palm oil exports,” the research house said in a note today.
Alliance Research said with no production threats foreseen for the year it has maintained its “neutral” call on the sector.