Across the world the use of the electronic cigarette (e-cigarette), a habit that is often called vaping, has risen significantly since the introduction of the modern e-cigarette in 2003 (in China). Also in Indonesia more and more people are seen using the e-cigarette, a device that tries to create the sensation of tobacco smoking.
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25 May 2018 (closed)
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Today's Headlines Excises
Turnover in the packaging industry of Indonesia stood at around IDR 50 trillion (approx. USD $3.8 billion) in the first three quarters of 2016, flat from turnover generated in the same period one year earlier. Ariana Susanti, Director of Business Development at the Indonesian Packaging Federation (FPI), said turnover in the industry grew in Q1-2016 but was under pressure in the following two quarters. Overall, the situation is still better in 2016 compared to 2015 when - amid sliding economic growth and bleak purchasing power - turnover fell.
From 1 January 2015 to the first week of September, Indonesia only managed to collect IDR 103.7 trillion (approx. USD $7.2 billion) in excise and customs duties revenue, or 53 percent of the full-year target (IDR 195 trillion) set in the Revised 2015 State Budget. As such, it is highly unlikely that this year’s government target will be met. Heru Pambudi, Director General of the Finance Ministry's Directorate General of Customs and Excise, said it is more likely that 95 percent of the target will be achieved, adding that the bulk of revenue comes from tobacco excise, followed by alcoholic beverages.
Starting from January 2015, Indonesian tobacco products are subject to an average tax rise of 8.7 percent. The excise tax on machine-rolled cigarettes becomes IDR 355 (USD $0.03) and on hand-rolled cigarettes IDR 290 (USD $0.02) per stick. The tax hike is implemented by the government in a move to increase state income through tax revenues. The higher excise tax is expected to have a minor effect on tobacco sales in Indonesia as retail prices for cigarettes remain among the lowest in the Southeast Asian region.
Latest Columns Excises
Recently, the Ministry of Finance issued Regulation number 179/PMK.04/2016 of 2016 on Customs Registration (New Regulation). The New Regulation revokes regulations number 59/PMK.04/2014 on Customs Registration and number No. 65/PMK.04/2007 on Customs Service Management Companies (Old Regulations). In this column we discuss the main changes of the New Regulation, including exemptions for customs registration, registration procedures and blocking and revocation to customs access.
Recently the Ministry of Finance issued Regulation number 86/PMK.04/2016, the second amendment on collection of export duty (Amendment). The Amendment aims to simplify export clearance procedures. The Amendment revises the types of goods that are not subjected to any export duty, procedures for physical checks of goods, and procedures for formulating export duties. In this column we will further discuss these amendments.
One of the last decisions of the Susilo Bambang Yudhoyono administration before being replaced by the new Joko Widodo-led administration was to raise the tobacco excise by an average of 8.7 percent per 1 January 2015. This excise will be applied to all tobacco-related manufactured products. The higher excise, stipulated by a Finance Ministry decree, will boost state income and will also help to curb smoking. About 65 percent of Indonesian men smoke, supported by the cheap price of a package of cigarettes.
Widespread cigarette consumption among Indonesians (especially men) can have a negative impact on the country’s current demographic bonus. One of Indonesia’s strongpoints in terms of economic make-up is that it has a large and young, thus potentially productive, population. Indonesians in the productive age (15 to 64 years) outnumber those that are categorized as youth (below 15 years) and elderly (over 65 years). This large productive group should provide a boost to Indonesia’s economy in the next two decades.
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