Tax rates proposed for two fats for milk

The Ministry of Finance has proposed a standard tax rate for anhydrous butter fat (ABF) and anhydrous milk fat (AMF), two different kinds of materials for processing milk products.

According to the ministry's official letter, 87/BTC-TCHQ, sent to Prime Minister Nguyen Tan Dung, the import tax rate of 15% on AMF imposed by the General Department of Customs was not reasonable, the Vietnam News Agency's reported on January 6.

The import tax rate at 15% for AMF would ensure different products have the same composition, the same utility and are used interchangeably but have different import tariffs.

The finance ministry said the import tax rate at 15% for materials used in production is too high and unreasonable against finished milk products with import tax rates of between 5% and 7% and imported yogurt with import tariffs of 10%.

The ministry confirmed that it adjusted preferential import tariff at 5% for both ABF and AMF under the list of preferential import tariff for 2016, an appendix of the Circular 182/2015.TT-BTC issued on November 16, 2015.

In December, eight dairy firms on the domestic market, including Vinamilk and Dutch-owned FrieslandCampina, sent a letter to the prime minister and the Ministry of Finance to complain that customs had ordered its local offices to collect back taxes from the businesses for AMF, totalling VND1 trillion (US$44.4 million) dating back to 2010 because the customs department insisted that ABF and AMF are two different products.

According to the existing regulations, import tax rate at 15% is imposed on any oil and fat products from milk other than anhydrous butter fat, butter oil and ghee.

Meanwhile, the businesses argued that despite different names, anhydrous butter fat and anhydrous milk fat are the same product with similar contents, citing different scientific documents released by local and international organisations.

For many years, the companies declared the two products at the same tax code of 0405.90.10 with an import tax rate at 5%.