Eight dairy goods importers, producers and traders have petitioned the Government and the Ministry of Finance to reconsider customs-claimed tax arrears amounting to hundreds of billions of dong.

According to the petition letter sent by Vinamilk, Hanoimilk, FrieslandCampina, Nutifood, Dai Tan Viet, Hoang Lam, A Chau and The He Moi, the customs has told them to pay extra value-added tax and import tariff for Anhydrous Milkfat imports as this material for dairy processing had been miscategorized and thus under-taxed.

Anhydrous Milkfat (AMF), also called Anhydrous Butterfat, is manufactured by New Zealand’s Fonterra. Under Codex Alimentarius Commission (CODEX STAN 280-1973), Vietnam National Standards (TCVN 8434:2010) and Vietnam National Technical Regulation (QCVN 5-4:2010/BTY), Anhydrous Milkfat and Anhydrous Butterfat are the same and coded 0405.90.10 (named “Anhydrous butterfat” under Harmonized Tariff Schedule), which has an import tariff of 5%.

However, the General Department of Customs argued that it should be coded 0405.90.90 (named “Other” under Harmonized Tariff Schedule), which has an import tariff of 15%.

The letter also noted that in the past, samples of imported AMF were taken by the department for investigation and analysis, which returned that such imported AMF indeed belonged to the product code 0405.90.10.

Therefore, the eight enterprises urged the Government and the Finance Ministry to order a halt to the tax collection decision. The additional tax payments would deeply affect their rights and interests for paying unreasonable taxes for goods that have been traded for many years and violate the Government’s commitment to bilateral and multilateral agreements if they become effective.

In addition, the new tax on AMF would force dairy enterprises to hike prices while the customs agency is likely to face legal disputes.

Speaking to the Daily, a representative of an AMF importer in Dong Nai Province said that AMF has been coded 0405.90.90 since November 2014, instead of 0405.90.10 as before.

The enterprise has clashed with customs officers over the issue. The Food Safety Department under the Ministry of Health has sent a document to the General Department of Customs as requested by the company to confirm AMF and Anhydrous Butterfat are indeed the same.

The enterprise has also proven that other countries apply the code 0405.90.10 to AMF. However, the effort has yet to bear fruit.

As the ratio of AMF in dairy products is low, prices of finished products would not dramatically rise given the tax hike, the representative added.

Meanwhile, an official of a customs agency in the south said AMF is mainly imported through border gates in Haiphong, Dong Nai, Binh Duong and HCMC. In the coming time, his agency would collect additional tax on the product with the total value of around VND200 billion.   

An official of the General Department of Customs was quoted by VietnamPlus as saying that AMF and Anhydrous Butterfat are subject to different tariffs and a number of enterprises have submitted false customs declarations to enjoy a lower tariff.

The leader said the tax arrears to be collected from dairy firms, producers and traders are estimated at VND700 billion (over US$31.1 million) instead of VND1 trillion as put by some previous reports.

He said the Ministry of Finance plans to meet with dairy enterprises before a final decision is made.