Indonesian’s Ministry of Finance Sets the Tax Policy for 2012

The government sets the tax policy for 2012, including the average increase tax rates about 16.3% or an increase of IDR 10 to IDR 70 per cigarette starting January 1, 2012.

Head of Communications and Information Services in Ministry of Finance, Yudi Pramadi, in his statement in Jakarta, Friday (2 / 12), said Minister of Finance has set the Minister of Finance Regulation (PMK) No. 167/PMK.011/2011 dated 9 November 2011 on the third amendment of PMK No 181/PMK.011/2009 regarding Tobacco Products Custom Tariff, in which the tariff will valid starting January 1, 2010.

Tobacco Tax

According to Yudi, this tax policy was set in order to achieve the revenue targets of the State Budget (APBN) in 2012 from tobacco excise sector, up to IDR 72 trillion, which is the agreement result on optimization of state revenue between the Government and Parliament.

Based on the PMK, the classification of tobacco product manufacturers still applying the 2011 policy, divided into two classes of manufacturers for the Clove Cigarettes Machine (SKM) and White Cigarettes Machine (SPM), and there are three classes of manufacturers for the Clove Cigarettes Hand (SKT).

As for the tariff structure, considering the results of the tobacco industry performance, the structure is simplified from 19 layers to 15 layers by combining multiple layers in some classes of types of tobacco.

The combinations include: (1) SKM group of three combined layers II / raised into two layers, so that the SKM group II consists of only two layers, (2) SPM class I of the three layers are combined into a single layer on a first layer, (3) SKT layer three-class I / raised in two layers so that SKT class I just consists of two layers, while (3) SKT group III is retained and no changes made.

Especially for entrepreneurs and Cigarettes plant of SKT White Hands (SPT) there are changes to limit the number of factory production, for Class II the limit is more than 300 million but less than two billion cigarettes and group III becomes no more than 300 million cigarettes.

Gradual Adjustment

This policy is intended to adjust gradually to the criteria of annual sales for the Micro, Small and Medium Enterprises (MSMEs) in accordance to article 6 of Law Number 20 Year 2008 on MSMEs.

The customs tariff system continues the policy applied in 2011, which is the system of specific tax rates for all types of tobacco products while considering production constraints and limitations of the retail selling price (HJE).

The average tax rate increase for 2012 is approximately 16.3 percent with the production of tobacco is estimated to reach 268.4 billion cigarettes.

The tobacco excise burden is increased moderately, ranges from IDR 10 to IDR 70 per stem.

There is no changes on excise rates for Tobacco Iris species (TIS), Cigar (CRT), Klobot (KLB), Rhubarb Menyan (KLM), and Other Tobacco Processing Results (HPTL), based on the consideration of (1) to protect the workforce, ( 2) limited marketing segmentation, and (3) the relative production does not grow.

While the tax rates for imported tobacco is set equal to the highest tax rates for each class of domestic-produce tobacco excise tax.

While the HJE restrictions and tariffs per cigarettes or grams of domestic tobacco, as well as excise tax and the minimum imported tobacco products HJE, are set out in annex I and II, PMK Number.

Source: Analisa, Medan