The Indonesian government will scrap a newly introduced 10 percent value-added tax on all livestock-related businesses, including cattle imports, in its latest policy flip-flop. The government will in the next few days announce a revision to a Finance Ministry regulation governing the taxation of the livestock industry, chief economics minister Darmin Nasution told reporters in Jakarta last Friday. The regulation, introduced late last year and aimed at boosting revenue, was widely panned by stakeholders in the livestock industry, who called it unnecessary and warned it could lead to higher inflation. “We’ve asked the Finance Ministry to temporarily stop imposing the value-added tax because it has a tremendous impact on strategic food [stocks],” Darmin said. Astera Primanto Bhakti, director of the Finance Ministry’s center for state revenue policy, confirmed the roll-back. “Livestock will be exempt from value-added tax in a bid to synergize policies on strategic food, accordingly to the VAT regulation on strategic goods,” he said in a statement. He did not say when the VAT would be rescinded. Djarot Kusumayakti, president director of the State Logistics Agency (Bulog), said separately he hoped the decision would lead to lower beef prices. “We hope the decision will prevent traders from increasing prices due to psychological factors. But there is no any guarantee,” he said. Last Friday, Bank Indonesia Governor Agus Martowardojo also weighed in on the matter, cautioning that the imposition of the VAT would stoke inflationary pressure.
Sumber: Antara News