Government Waives Import Milk Tax

Tuesday, 19 Nov 2024

By putri@insightinnews.com The government has exempted imported milk from value-added tax (VAT). This exemption is one of the reasons why the price of imported milk can be lower than that of local milk. The VAT exemption for imported milk is regulated under Government Regulation (PP) Number 49 of 2022 concerning Exemptions from Value-Added Tax and the Non-Collection of Value-Added Tax or Luxury Goods Tax on Imports and/or the Delivery of Certain Taxable Goods and/or the Provision of Certain Taxable Services from Outside the Customs Area. According to Article 7 (2) letter (i) of PP 49/2022, milk is classified as a basic necessity that is essential for the general population. In this context, milk is considered a commodity that significantly impacts the livelihoods of many people, with a high demand for its availability, and it serves as a supporting factor for community welfare. Therefore, referring to Article 6 (1), milk is one of the goods exempted from VAT. The category of milk that qualifies for this exemption includes fresh milk that meets the criteria of pasteurized or cooled milk and does not contain added sugars or other substances. The protests by dairy farmers in East and Central Java, who have gone viral on social media by bathing in milk and discarding fresh milk for free, stem from allegations that the industry prefers to use imported milk. Bayu Aji Handayanto, a dairy farmer and collector from Pasuruan, East Java, expressed his frustration over having to discard his milk production due to the preference of businesses for imported milk. This situation is largely attributed to the lenient import regulations established by the government. "The government's oversight has indeed been lacking. The import channels have been opened without any taxes on milk, allowing for unrestricted imports," stated Bayu Aji Handayanto. Minister of Cooperatives Budi Arie Setiadi acknowledged that 80 percent of the 4.4 million tons of milk consumed annually in Indonesia is imported. "The current market condition indicates that 80 percent of the national milk supply is sourced from imports, while only 20 percent is produced locally," Budi Arie remarked on Tuesday, November 12. Of the 20 percent that is locally produced, 71 percent, or approximately 400 thousand tons, comes from 59 dairy cooperatives across Indonesia, including those in Lembang and Pengalengan in West Java, as well as Pasuruan and Malang in East Java. In a separate statement, Budi noted that imported milk, such as that from Australia and other countries, benefits from duty-free status due to free trade agreements with Indonesia. "Exporting countries take advantage of the free trade agreements with Indonesia, which eliminate import duties on dairy products, resulting in their prices being at least 5 percent lower than those from other global dairy exporters," Budi explained during a press conference at the Ministry of Cooperatives earlier this week.

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