EU Probes Indonesian Biodiesel Exports Over Alleged Income Tax Evasion

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PALMOILMAGAZINE, BRUSSEL – Trade relations between the EU and Indonesia have intensified due to the publication of the European Union Deforestation Regulation (EUDR). This regulation aims to prohibit the export of products associated with deforestation.

Given that Indonesia and Malaysia are the primary suppliers of palm oil, it is anticipated that this regulation will impact palm oil exports to the EU. Notably, palm oil is not only used in biodiesel but also finds widespread use in the production of food and cosmetic items.

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On Thursday, August 18, 2023, the European Union (EU) initiated an investigation into whether palm oil biodiesel exported from Indonesia was attempting to evade income tax within the EU via transactions involving China and the United Kingdom (UK

The EU stands as one of Indonesia’s largest markets for palm oil, trailing behind only India and China. The need for this investigation arose following a request from the Board of European Biodiesel, an EU association representing producers in the region.

In an official statement, the EU Commission noted that the decision to investigate may indicate the presence of sufficient evidence suggesting the implementation of countermeasures within the import products under scrutiny.

The Commission also highlighted a shift in the trade system related to palm oil exports, involving the Chinese Government and the UK as a consequence of these countermeasures.

Quoted by Reuters, Djatmiko Bris Witjaksono, the General Director of International Trading Negotiation at the Indonesian Ministry of Trade, expressed the Indonesian government’s commitment to closely monitor the investigation.

He further emphasized that necessary actions would be taken in accordance with World Trade Organization (WTO) regulations if unfavorable developments occurred.

Also Read : Putu Juli Ardika: Palm oil downstream products encouraged the implementation of biodiesel mandatory program since 2015

Earlier this week, Indonesia initiated a dispute consultation with the WTO regarding the EU’s imposition of income tax on biodiesel imports from Indonesia.

When queried about this situation, the spokesperson for the EU Commission conveyed the EU’s belief that the investigation would align fully with WTO regulations. The EU also expressed readiness to engage in discussions on this matter with the Indonesian government.  (T2)

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