Finance ministry weighs in on controversial dairy back taxes of $30 million

By Quang Thuan, Thanh Nien News

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A customer at a dairy shelf in a Vietnamese supermarket. Photo: Dao Ngoc Thach A customer at a dairy shelf in a Vietnamese supermarket. Photo: Dao Ngoc Thach


Eight dairy importers and producers in Vietnam may be able to escape back taxes of VND700 billion (US$30.69 million) in a controversial case of import tariff calculations that even officials cannot see eye to eye on.
The businesses, including Vinamilk and Dutch-owned FrieslandCampina, said they have imported an ingredient called anhydrous milk fat from New Zealand-owned dairy company Fonterra since 2000.
Over the years, they have declared it as anhydrous butter fat, which they argue is the same product and is subject to a 5 percent tariff.
Under Vietnam's existing laws, oil and fat products from milk other than anhydrous butter fat, butter oil and ghee are taxed at a much higher rate of 15 percent.
Customs officers have recently ruled on the case, saying that anhydrous milk fat and anhydrous butter fat are not the same.
They demanded back taxes, totaling VND700 billion and dated back to 2010, from the businesses. 
In its recent letter to the Prime Minister, the Ministry of Finance has voiced its support for the businesses which have been seeking the government's help in fighting the customs' demand over the past month.
According to the ministry, the two products in question are almost the same. If customs choose to differentiate between them, they should still be taxed similarly, at 5 percent. 
Commenting on the controversy, the ministry blamed it on the lack of transparency in tax rules on dairy products.

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