January 25, 2016

Protests from Indonesia's Chamber of Commerce had led the government to withdraw a value-added tax (VAT) on most of the country's livestock businesses, Reuters reported.

The 10% levy was effected on January 8 in an attempt to control beef and chicken prices, but excluding imports of breeding cattle. The move was purposed to protect local breeders, according to government officials who denied that the tax was imposed for income gains.

"To synergise 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.

However, the Chamber of Commerce complained that the VAT creates double taxation.

"VAT is not imposed on food anywhere in the world because it will affect a lot of people," said chamber official Juan Permata Adoe.

Furthermore, another consequential effect of VAT is increased inflation that could last for two to three months, Bank Indonesia said.

In 2015, millions of chickens in Indonesia had to be culled to stabilise supply while a higher number of import permits on cattle were granted to cool beef prices.

- Reuters