Lynas Malaysia Sdn Bhd is a wholly owned subsidiary of Lynas accountable for the development of the company’s rare earths processing plant at the Teluk Kalong industrial park, in Kemaman on the east coast of Malaysia. The Malaysian Minister of Finance has approved the project with special tax incentives to Lynas for operating a rare earth deposits plant in Malaysia (Lynas Corporation Ltd, 2007). Some of the tax incentives include a pioneer status secured for the Kemamam Rare Earths Processing plant with an associated considerable tax incentive package to Lynas Malaysia Sdn Bhd, 100% corporate tax exemption at the statutory income for a period of 10 years which was later increased to 12 years, an exemption on import duty and sales tax for all
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Lynas is expected to make about AUD 6.2 billion in pre-tax profit in 2012 and 2013 and in exchange they contaminate the Malaysian land (Malaysiakini, 2011). Malaysia has various tax exemption rulings such as pioneer status, investment tax allowance, agriculture allowance and reinvestment allowance. These tax legislations are meant for promoted industries or promoted areas to expedite economic growth and job opportunities in selected sectors or geographical areas (namely Sabah, Sarawak and Eastern Corridor of Malaysia). Those that oppose the establishment of Lynas’ facility being granted a tax holiday claim that the government is allowing Lynas to acquire the large windfall arising from rare earths' price inclination movement while sustaining huge and potentially catastrophic social cost without making them compensate Malaysians adequately (Malaysiakini, 2011).This evidently shows the inability of the government to administer the weight of tax in a reasonable manner. The Australian community would also be denied their rightful share of Lynas' obligation to pay MRRT (Minerals Resource Rent Tax), if the plant was based in Australia instead. Therefore, the Malaysian government is really bestowing an ignorant loop hole to Lynas and doing massive damages to the population of both nations. This tax exemption is ascertaining to be the worst agreement the Malaysian government has ever made. At least for other lop-sided agreements, no matter how twisted the terms are, there are still some benefits such as having power and access to highways but as for Lynas, the cons outweighs the pro’s due to the imminent harm caused by the rare earth deposits processing plant
Lynas is expected to make about AUD 6.2 billion in pre-tax profit in 2012 and 2013 and in exchange they contaminate the Malaysian land (Malaysiakini, 2011). Malaysia has various tax exemption rulings such as pioneer status, investment tax allowance, agriculture allowance and reinvestment allowance. These tax legislations are meant for promoted industries or promoted areas to expedite economic growth and job opportunities in selected sectors or geographical areas (namely Sabah, Sarawak and Eastern Corridor of Malaysia). Those that oppose the establishment of Lynas’ facility being granted a tax holiday claim that the government is allowing Lynas to acquire the large windfall arising from rare earths' price inclination movement while sustaining huge and potentially catastrophic social cost without making them compensate Malaysians adequately (Malaysiakini, 2011).This evidently shows the inability of the government to administer the weight of tax in a reasonable manner. The Australian community would also be denied their rightful share of Lynas' obligation to pay MRRT (Minerals Resource Rent Tax), if the plant was based in Australia instead. Therefore, the Malaysian government is really bestowing an ignorant loop hole to Lynas and doing massive damages to the population of both nations. This tax exemption is ascertaining to be the worst agreement the Malaysian government has ever made. At least for other lop-sided agreements, no matter how twisted the terms are, there are still some benefits such as having power and access to highways but as for Lynas, the cons outweighs the pro’s due to the imminent harm caused by the rare earth deposits processing plant