The threshold will be raised from USD $250 to USD $500 per person, implying those people who travel to Indonesia - who carry goods (bought abroad) with them with a maximum value of USD $500 - will not need to report these goods to customs and will not need to pay import duties or tax.

The Finance Ministry felt it had to raise the threshold because the country's per capita GDP has grown since 2010 (when the regulation was last revised), hence Indonesians are now able to buy more expensive goods abroad. Indonesia's middle class has expanded rapidly over the past eight years and traveling to (for example) Singapore for a few days (or for only a few hours) has become much more common.

The regulation concerns products brought into Indonesia by individuals with the purpose of personal use. Thus, these goods cannot be sold in Indonesia or be - in any other way - used commercially.

To illustrate the aforementioned, here is an example. When an Indonesian citizen or an expat living in Indonesia returns to Indonesia taking with him an iPhone (purchased abroad) that costs USD $800 (or ten pieces of clothes that together cost USD $800) then he or she will need to pay taxes and an import duty over USD $300 (because up to USD $500 is duty-free). The USD $300 is subject to a 10 percent import duty, a ten percent value-added tax (VAT) and income tax (pajak penghasilan, or PPh). This income tax is 7.5 percent if the individual has an Indonesian tax number (NPWP) or 15 percent if he does not have a tax number.

The revision PMK 188/PMK 04/2010 will also scrap the existing regulation that allows a family to bring up to USD $1,000 worth of foreign purchased goods into Indonesia duty-free. Thirdly, the revision will simplify the income duty system for personal goods to a general tariff of 10 percent. Fourthly, it sets limits to the amount of products that can be brought into Indonesia (examples that were given are 10 pieces of apparel, two electronic products, two watches, and three bags).

It will still require several days before the new regulation comes into effect as Indonesia's Ministry of Law and Human Rights needs to give a number to the new regulation. Finance Minister Indrawati said this could take up to two days.

Bahas