Indonesia – Increase on Import Income Tax – Higher Consumer Products Price

As a part of Economic Policy Package Volume II, the Ministry of Finance issued a new regulation to improve the balance of transactions, maintain rupiah exchange rate, and reduce the import of certain goods. Minister of Finance Regulation Number 175 of 2013 on the Third Amendment of Ministry of Finance Regulation Number 154 of 2010 on Collection of Income Tax Article 22 with Regard to Payments on Delivery of Goods and Import Activities or Other Business Activities (“Regulation 175”) was issued on 5 December 2013 and will come into effect in the first week of January 2014.

The regulation contains the following main provisions:

1. The tariff of Import Income Tax on certain products is increased from 2.5% to 7.5%; and
2. The 7.5% tariff applies to goods not related with production input, goods not triggering inflation, and consumption goods with a high import value.
3. The new tariff applies to 502 types of goods based on the Indonesian Customs Tariff Book (BTKI).

For further information please contact, Wimbanu Widyatmoko, Managing Partner, Mochamad Fachri, Partner or Riza Fadhli Buditomo, Senior Associate, Hadiputranto, Hadinoto & Partners (a member firm of Baker & McKenzie International).