Crop Biotech Update

Indonesia Proposes Tax Cut to Help Biofuel Producers

April 25, 2008
In an effort to encourage and maintain viable biofuel production amid rising palm oil prices, the Indonesian National Biofuel Development Committee (NBDC) has proposed a tax cut in the form of reduction in value added tax (VAT). Palm oil is the main raw material for biodiesel in Indonesia, and its price has almost risen two-fold to about 783 Euros per tonne. NBDC secretary, Evita Legowo, says that the proposed tax cut has a mechanism that is similar to the palm oil export tax introduced in February this year. Under the mechanism of the palm export tax, “the government sets a 15% export tax if the price of crude palm oil (CPO) is between US$ 1,100 (about 693 Euros) and US 1,200 per tonne, 20% if the price is between $1,200 to $1,300 per tonne, and 30% if the price exceeds $1,300 per tonne..