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Tobacco Excise Raised by 8.5% in Indonesia

Tobacco Excise Raised by 8.5% in Indonesia

by Mary Swire,, Hong Kong

05 December 2012

Indonesia’s Finance Ministry has announced an excise tax increase averaging 8.5% on tobacco products, raising the price of a single cigarette by between IDR5 and IDR20. The increase will take effect from December 25, 2012.

The ministry is maintaining its 2012 policy on tobacco products in 2013, and duty payable will continue to be based on manufacturers’ production levels, with rates rising as production scales increase. Excise tax on imported tobacco will match the highest rates for locally-produced products.

In September, the government agreed to increase the country’s tax ratio target for 2013 to 13.5% of gross domestic product, raising projected tax revenues from around IDR1,180 trillion (USD123.5bn) to about IDR1,300 trillion. Tobacco excise revenue for 2013 is expected to amount to IDR88.02 trillion.

The government is also looking to improve tax compliance; recent figures showed that Indonesia currently receives revenue from only 3.8% of its potential corporate taxpayers, representing a mere 460,000 businesses out of 12m registered firms. Specific sectors, such as domestic trading, are to be targeted, and the Ministry of Finance has launched a national tax census to increase the number of individual Indonesian taxpayers.

Indonesia hopes to be among the 10 largest economies in the world by 2025.


TAGS: tax | Indonesia | excise duty | public health