Indonesia policy U-turn on cattle
In the government's latest flip-flop on policy.
Indonesia policy U-turn on cattle
* Govt removes 10 pct VAT from livestock business
* VAT initially applied on Jan. 8
JAKARTA, Jan 22 Indonesia has reversed a decision to impose value added tax on most of its poultry and cattle businesses, spurred by industry complaints, a government official said on Friday, in the government's latest flip-flop on policy.
Southeast Asia's largest economy has been struggling to rein in the prices of beef and chicken after a string of self-sufficiency policies backfired on the government.
The imposition of 10 percent VAT since Jan 8, on almost all livestock businesses, ranging from cattle and poultry to the sheep industry, but excluding imports of breeding cattle, caught many by surprise.
Government officials initially said the move was intended to protect domestic breeders. They also brushed off speculations the administration wanted to expand its sources of income.
"To synergize food policy, especially strategic goods in the food sector, we will exempt livestock from VAT," said Astera Primanto Bhakti, one of the special staff of the finance minister, without assigning a reason for the removal.
Earlier on Friday, Indonesia's Chamber of Commerce protested to the Coordinating Ministry of Economics, saying that VAT led to double taxation, rather than protecting stock farmers.
"VAT is not imposed on food anywhere in the world because it will affect a lot of people," said chamber official Juan Permata Adoe.
If the tax was applied, Bank Indonesia said, there would be additional inflationary pressure lasting for two to three months.
Last year, Indonesia had to cull millions of chickens to ease supply swings and issued more import permits on cattle to cool beef prices.
Source: Reuters (Reporting by Bernadette Christina Munthe; Writing by Gayatri Suroyo; Editing by Clarence Fernandez)
