Local customs agencies will not proceed with a controversial plan to collect extra value-added and import taxes from importers, producers and traders of Anhydrous Milkfat (AMF) imports as requested by the Ministry of Finance.

The plan was put on hold around two weeks after Vinamilk, Hanoimilk, FrieslandCampina Vietnam, Nutifood, Dai Tan Viet, Hoang Lam, A Chau and The He Moi petitioned the Prime Minister and the Finance Ministry to reconsider it.

A senior source from a customs department in the south which accounts for the bulk of AMF imports said that the agency has suspended the plan as ordered by the ministry. The customs had claimed dairy processors would have to pay VND200 billion (US$9.04 million) in extra import tariff, saying AMF had been miscategorized, leading to a miscalculation of tax.

“Leaders of the Ministry of Finance have told the taxman to collect the extra tax when there are sufficient legal grounds; otherwise, the plan must be scrapped,” the official told the Daily.

A few days ago, the Government Office issued a document conveying Deputy Prime Minister Hoang Trung Hai’s request to the ministry to resolve the petition by the eight dairy firms.

The companies said in the petition letter that the customs required them to pay extra value-added tax and import tariff for AMF imports since 2010 as this material for dairy processing had been miscategorized and thus under-taxed.

AMF, also called Anhydrous Butterfat, is coded 0405.90.10 and subject to an import duty of 5% in line with Codex Alimentarius Commission (CODEX STAN 280-1973), Vietnam National Standards (TCVN 8434:2010) and Vietnam National Technical Regulation (QCVN 5-4:2010/BTY). But the General Department of Customs argued that it should be coded 0405.90.90 (named “Other” under Harmonized Tariff Schedule) and has an import tariff of 15%.