Indonesia introduces new palm oil taxation rules to boost competition

Indonesia, the world's largest palm oil exporter, will introduce new monthly levies to increase its competitiveness with rival edible oils. This was revealed in a regulation released by the finance ministry on Thursday.

The new rules that come into effect this Saturday will set levies on crude palm oil at 7.5% of the price reference set by the government.

Documents showed that the levy rate for palm oil refined to a higher degree will be lower, between 3% and 6 percent of the reference rates.

Indonesia charges a levy ranging from $55 to $240 per metric tonne for the export of crude palm oil, depending on price brackets set for the monthly benchmark price.

According to the Finance Ministry's decree, these changes are being made to "improve palm oils competitiveness and add value to farmer's fresh fruit bunches".

An official from the government has said previously that palm oil is losing its competitive advantage against rivals like soyoil or sunflower oils.

The levies collected are used to finance palm oil programs such as the replanting subsidies for smallholders, and for biodiesel programmes in the country. (Reporting and Additional Reporting by Ananda Teresia, Editing by Martin Petty.)

(source: Reuters)