The presence of import duties and taxes are apparent in all sovereign countries including Indonesia whether in importing goods from an individual or a commercial entity especially since the development of e-commerce and online transactions.

As companies began to open up their business towards international audiences or customers through online marketplaces, paying attention to import duty and taxes has become a rather important aspect in expanding their scope. Indonesia is no exception as their import regulations have begun to adjust and develop with the increasing number of online businesses.

This begs the question on estimated expenses businesses need to look into towards importing goods to Indonesia or what import duty and taxes needs to be considered based on the regulations of certain goods.

The common valuation method in all imported goods are included in the CIF (Cost, Insurance, and Freight) duty in which goods are calculated based on the complete shipping value such as, cost of the imported goods, the cost of freight, the cost of insurance and may also be charged according to the unit of measure.

In addition to duty, goods are also subject to Value-Added Tax (VAT), Excise, Income Tax, STLG although some taxes are dependent on the product. In general, CIF/duty costs in Indonesia vary from 0% to 40%, with the average duty rate at 10.89% which are dependent on the type of goods that are imported.

Aside from CIF/Import Duty, imported goods are usually subject to VAT which are calculated based on CIF value and duty. The standard VAT is also said to have a standard rate of 10% or at a reduced rate between 0% and 5% although it may vary based on the unit of measure as aforementioned before.

Other import duty/taxes aside from CIF and VAT are excise which is used in limiting or controlling some imported goods for national consumption which are mostly alcohol or tobacco related products that are typically at a rate of 275% on the sum of the CIF value and duty. Income tax for certain products is charged at 2.5% for registered importers, and 7.5% for unregistered importers which may vary according to the specific product.

For Luxury tax/STLG, it is usually applied for certain products with examples such as luxury cars, motorcycles, alcoholic beverages, branded shoes, etc. It is usually at rates between 10% and 75% and is also according to the sum of the CIF value and duty. Although taxes vary according to the imported goods, the highest rate of duty and taxes are for alcoholic drinks (80-90%) and luxury items like cars (60%-170%).

Regulations in Indonesia’s import duty and taxes has also recently been enacted as the Finance Ministerial Regulation (PMK) No.199/2019. The overall conclusion of the new regulations states that Importers now only have to pay 17.5% of the taxable items they import into Indonesia, which has reduced 9.5% from the previous 27%. Although, it is important to note that some goods are not subject to these regulations like shoes, bags, or clothes.

Many have noted the sheer complexity of Indonesia in its customs, procedures, and regulations of import goods which may be confusing to understand fully. This is why some companies include services to help local and international businesses in being able to effectively import goods towards Indonesia. Uniair Cargo also provides this service namely as the customs clearance service, contact us to learn more.