SINGAPORE, Dec 11 (Reuters) - Malaysia will set a tax rate for the export of crude palm oil for January by using the average sales price from Nov. 10 to Dec. 9 as the reference price, a government source said, a level that analysts said could result in zero tax.
The new tax rate comes under a plan approved by the world’s second-largest palm oil producer in October to cut crude palm oil (CPO) export taxes as it tries to claw back market share from top producer Indonesia.
Under the new structure, January export taxes are likely be set at zero, given that the average CPO price from Nov. 10 to Dec. 9 fell below the lowest reference price of 2,250 ringgit ($740) per tonne, Maybank Investment Bank said in a research note on Tuesday.
This would help Malaysian exporters ship as much CPO as possible to reduce a record stockpile of 2.56 million tonnes in November.
The government will announce the tax levy on the 15th of every month using Malaysian Palm Oil Board prices for reference and will formalise the January tax in a gazette set to be issued on Dec. 17, said the source, who declined to be identified because he is not authorised to speak to the media.
Malaysian exporters have been concerned that the new tax mechanism could spark a tax war with Indonesia, although the world’s largest palm oil producer said it was resisting pressure to change its export tax system in response to Malaysia’s planned tax cuts, a junior minister said on Tuesday. ($1 = 3.0595 Malaysian ringgit) (Reporting By Chew Yee Kiat; Editing by Jane Baird)