Ministry Of Finance Explains Dairy Import Duty And Tax Regulations

Thursday, 21 Nov 2024

By putri@insightinnews.com The Ministry of Finance has provided clarification regarding the regulations on import duties and taxes on milk, which have garnered attention due to the issue of excess domestic milk production that is not being absorbed by processing plants. In terms of import duties, the Director General of Customs and Excise, Askolani, noted that Indonesia has a trade agreement with Australia and New Zealand through the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA). Under this agreement, milk imported from Australia and New Zealand benefits from a zero percent import duty. "This is related to the free trade agreement (FTA) between ASEAN, Australia, and New Zealand, which we are also implementing," Askolani stated during a meeting at the Central Office of the Directorate General of Customs and Excise (DJBC) in Jakarta on Thursday. The agreement is further detailed in the Minister of Finance Regulation (PMK) Number 166 of 2011 concerning the Determination of Import Duty Tariffs for Goods in the context of the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA). Additionally, regarding taxes, milk is classified as one of the goods exempt from value-added tax (VAT). This provision is outlined in Government Regulation (PP) Number 49 of 2022. Article 7 of this regulation specifies that goods categorized as essential needs, which are critically required by the public and have a high demand scale, as well as being a supporting factor for community welfare, are exempt from taxation. Susu is classified as a commodity essential to the public, which is exempt from Value Added Tax (VAT) on imports and/or deliveries, as outlined in Article 7, paragraph 2. Furthermore, this provision specifies that the milk in question must meet the criteria for fresh milk, whether it has undergone cooling or pasteurization processes, and must not contain added sugars or other substances. Consequently, as long as these criteria are met, both the import and domestic sale of milk are exempt from VAT. Recently, the conditions of dairy farmers and milk cooperatives have come under scrutiny, particularly after dairy farmers and milk collectors in Boyolali Regency, Central Java, expressed concerns regarding the quota restrictions imposed on milk absorption by the dairy processing industry. On Saturday, November 9, milk collectors and farmers staged a protest in Boyolali, engaging in a symbolic act of bathing in milk that could not be processed by the industry. The daily milk production by dairy farmers and collectors in Boyolali reaches 140,000 liters, while the current absorption by the dairy processing industry is only about 110,000 liters per day, leaving a surplus of 30,000 liters that remains unprocessed. One of the affected cooperatives is KUD Mojosongo, the largest milk production cooperative in Boyolali Regency. Minister of Cooperatives Budi Arie Setiadi has stated that he will coordinate with the Ministry of Trade to evaluate the regulations surrounding milk imports in light of the domestic overproduction issue that is not being absorbed by factories.

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