There are several laws in Indonesia which are related to the importation of goods into the country. Some specify how imported goods are to be taxed, some specify restrictions on the importation of certain products, and still others outright ban the importation of certain items into Indonesia.
Why Import Restrictions are Necessary
Every country in the world imposes restrictions on items which may be brought into the country. Although import restrictions may initially appear to be an unwelcome burden on anyone entering the country, there are usually several valid reasons why the items restricted by government authorities are subject to such restrictions. These reasons may range from security risks to the possibility of the smuggling of illegal items to the intent to use such items to oppose the country’s government as well as many others. In Indonesia, certain items are subject to import restrictions. The items which are restricted with regard to importation into Indonesia are those of which the government considers monitoring of such imports necessary.
Items Which Are Subject to Import Restrictions in Indonesia
There are many different items which are subject to import restrictions in Indonesia. Among the most notable of these are certain electronic devices including handheld computers, tablets, and cell phones. There are also several laws in Indonesia which apply to the importation of such items. These are MOT Regulation 82/2012 as amended by Regulations 38/2013, 68/2015, and 41/2016 as well as MOI Regulation 108/2012 which has been effect since January 2013. These laws impose certain import licensing requirements with regard to cell phones, handheld computers, and tablets. According to Regulation 82/2012, importers of such items are not allowed to sell directly to retailers or consumers. They must also utilize the services of a minimum of three distributors before they may become eligible for a MOT importer license. MOT Regulation 41/2016 requires 4G device importers to provide either evidence of contributions which they have made to the development of the domestic device industry or cooperation with domestic manufacturing, design, or research firms.
Indonesian import restriction also prohibit certain products from entering Indonesia. The Restricted and Banned Goods list, also known as the LARTAS list, regulates the entry of such products. These items include narcotics and other illegal drugs, pornographic material in any format, and politically sensitive material in any format. There are also certain items which are only allowed to enter Indonesia if the person bringing them into Indonesia has the necessary license or permit. These include firearms and other guns, hunting rifles, ammunition, and explosives. According to Indonesian laws, anyone who attempts to import such items into Indonesia could potentially be fined, jailed, or both.
Licenses Required to Import Items into Indonesia
In response to stakeholder concerns, in December 2015, the Ministry of Trade (MOT) issued Regulation 118/2015 on complementary goods. This regulation allows companies which are operating under an API-P import license 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. In October 2015, MOT issued Regulation 87/2015 on the Import of Certain Products. This regulation replaced Decree 56/2009, which had been extended through MOT Regulation 83/2012. Just as had been the case with its predecessors, Regulation 87/2015 requires pre-shipment verification by designated companies (to be referred to as “surveyors” in Indonesia). This verification is to be purchased by the importer. This regulation also limits the entry of imports to designated ports and airports while maintaining non-automatic import licensing requirements on products including but not restricted to electronics, toys, footwear, household appliances, cosmestics, food and beverage products, and footwear. For those who are holders of an API-U license, Regulation 87/2015 serves eliminates the additional requirement to register as an importer of certain products.
Cost of Importing Items into Indonesia
Importing items into Indonesia can be as expensive or as cheap as is necessary. The applicable import costs depend on the type of item to be imported into Indonesia. The total tax of imported goods is also known as the Declaration of Imported Goods (PIB; Pemberitahuan Import Barang).
Three main types of taxes apply when importing goods to Indonesia. These are import duty, value-added tax (VAT), and income tax. Import duty may be anywhere from 0% to 450%. The exact figure depends on the HS Code of the products to be brought into Indonesia. VAT in Indonesia is set at 10%. Income tax with regard to the importation of specific items into Indonesia is at least 2.5% but may be higher in certain situations.
Products which are deemed to be luxury goods are also subject to luxury tax. The rate at which luxury tax is imposed rate depends on the luxury good in question. 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%.
There is a specific procedure to be used for the calculation of the value of total import tax. This formula begins by calculating the total value of the goods in Indonesian rupiah. This is done by adding the goods’ total value in US dollars to the total CIF. CIF is defined as the sum of the freight on board, freight cost, and insurance; this total is then multiplied by the exchange rate. The sum of the goods’ total value in US dollars and the total CIF is then multiplied by the US dollar to Indonesian rupiah exchange rate to arrive at the total value in Indonesian rupiah.
To calculate total import tax and duty, the following must be added: import duty, VAT, and income tax. Import duty is the total value in Indonesian rupiah multiplied by the percentage of import duty. VAT is the sum of total value in Indonesian rupiah and import duty multiplied by 10%. Income tax is the sum of total value in Indonesian rupiah and import duty multiplied by the relevant percentage of income tax.
Taxes related to imports are just some of the many taxes imposed in Indonesia. Understanding all of one’s tax obligations in Indonesia can sometimes be difficult. This is where we at Paul Hype Page & Co come in. Our tax experts will help you understand your tax requirements and even assist you with the filing and payment of your taxes. We will also assist in lowering your tax bill by guiding you through the various tax benefits and advantages in Indonesia for which you are eligible.
Process of Importing Items into Indonesia
The process of importing items into Indonesia can be separated into two stages. The first of these is that of finding a buyer in Indonesia and deciding upon the appropriate trade terms. There must first be an importer or distributor who has a necessary importing license. Before the importation can be carried out, there must be an agreement with the importer or distributor. The importation of certain products also require registration from certain related institutions. Certain products also require specific requirements to be fulfilled before they may be brought into Indonesia. It is also imperative to complete all required supporting documents so that the importer may be able to process these documents.
The second stage of the importation process is the clearance process. This process begins after the importer has completed the payment. At this point, the Customs Declaration Form
(PIB) is to be submitted along with its supporting documents to the Customs Office so that a Customs Clearance Approval may be obtained. The supporting documents to be submitted include payment evidence; import identification number (API); tax registration number (NPWP); customs registration number (SRP); proof of deposit of customs duty, excise, and taxation; a bill of lading or an airway bill; an insurance letter; and an authorization letter if the informant is a customs clearance company.
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Import Laws and Regulations in Indonesia FAQs
There has not as of yet been any major discussion on changing Indonesia’s laws on import restrictions. Thus, they are not expected to be changed in the near future.
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.
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.