Starting a business in Indonesia is a great first step towards your business success. With Indonesia having one of the most profitable market and taking strides to improve the import and export protocols, it is on track to its target of being the world’s top 5 largest economy by 2045.
Under Government Regulation No. 29 of 2021 (Reg 29/2021), the Ministry of Trade (MoT) is the authority that issues approvals, verifications, obligations, and licenses on import-export activities in Indonesia.
Why Import Restrictions are Necessary
Every country place restrictions on the products that can be carried in. Although import limits may appear to be an undesirable burden for everyone entering the country, there are multiple good reasons as to why government officials prohibit certain commodities.
These reasons could include everything from security concerns to the likelihood of illegal materials being smuggled in, as well as the desire to use such items to destabilise the country’s leadership. Certain items are subject to import restrictions in Indonesia.
Items Which Are Subject to Import Restrictions in Indonesia
When it comes to import laws and regulations, there is a list of items which are restricted. One of the most notable classification of items is electronic devices, which include:
According to Regulation 82/2012, importers of such items are not allowed to sell directly to retailers or consumers. They must also utilise the services of a minimum of three distributors before they may become eligible for a MOT importer license.
Under the Indonesia import laws and regulations, the governing body has come up with a LARTAS list, also known as the Restricted and Banned Goods List. This list restricts the admission of the following products, among others:
Narcotics & other illegal drugs
Pornographic content in any format
Politically sensitive material in any media
There are also some products that can only be brought into Indonesia if you have the appropriate permission or license. These include:
Firearms and other guns
Explosives are among them
NOTE: Anyone attempting to import such products into Indonesia could face fines, imprisonment, or both, according to Indonesian laws.
Licenses Required to Import Items into Indonesia
Whether you are a local PT or PT PMA company, if you are operating under an API-P import license, you are allowed to import finished products for complementary goods, market testing, or for other services which are not the sale itself. However, the products to be imported must be new, in line with the details stated in the company’s business license and satisfy all import requirements.
The Regulation 87/2015 on the Import of Certain Products restricts imports to specific ports and airports while keeping non-automatic import license regulations in place for certain products. Some of these include:
Food and beverages
NOTE: Regulation 87/2015 eliminates the additional necessity to register as an importer of certain products for persons who hold an API-U license.
Cost of Importing Items into Indonesia
Importing things into Indonesia can be as costly or as inexpensive. The import charges are determined by the type of item being imported into Indonesia. The Declaration of Imported Items is another name for the total tax on imported goods (PIB; Pemberitahuan Import Barang).
When importing goods into Indonesia, there are three sorts of taxes to consider:
Import duties might range anywhere from 0% to 450%. The actual value is determined by the HS Code of the goods being imported into Indonesia. In Indonesia, the value added tax (VAT) is set at 10%. Income tax on particular items imported into Indonesia is at least 2.5%, but it may be greater in other cases.
NOTE: It is planned that VAT in Indonesia will be increased to 11% in April 2022 and to 12% by 2025.
Products which are deemed to be luxury goods are also subject to luxury goods sales tax (LGST). The rate at which luxury tax is imposed rate depends on the luxury good in question, and are set between 10% to 125%.
NOTE: The maximum LGST rate set by the law is 200%.
Alcoholic beverages are taxed at between 5% and 20%, branded shoes at 40%, luxury motorcycles at between 60% and 125%, and yachts at 75%. The highest luxury tax rates are reserved for luxury cars. Luxury cars are taxed at between 150% and 200%.
If you’re a foreign entrepreneur serious about starting your business in Indonesia, having a local service provider heavily involved and supporting your operations and handle your taxation would be a definite advantage. Reach out to us for a free consultation.
The government of Indonesia has had to impose restrictions on the importation of certain items into Indonesia. It had to do so due to the adverse effect of such products on the Indonesian community as a whole as well the sovereignty and general well-being of the country.
Why do people attempt to import restricted or prohibited items into Indonesia?Tiwi2021-11-19T10:22:46+08:00
Some of the items which are subject to restrictions or prohibitions of importation into Indonesia include pornographic material, politically sensitive material, narcotics and other drugs, and certain weapons and guns if the person importing them in Indonesia does not have the necessary permit. Some break Indonesia’s import laws due to ignorance of the specific details of the laws; however, there are others who have malicious intent and have attempted to blatantly break the law by forcing such items in Indonesia.