Newest Import Duties in Indonesia: 2024 Update

A new governmental regulation stipulates that import duties in Indonesia have been effective since January 30, 2020. This regulation is the Finance Ministerial Regulation (PMK) No.199/2019, and it was enacted to reduce the maximum value for imported goods to be tax-free.

According to PMK 199/2019 issued by the Ministry of Finance, the maximum value of tax-free items for import into Indonesia will be decreased from US$75 to US$3 for each recipient and shipment.

Understanding Import Duties, Tariffs, and Taxes

Importing goods into Indonesia involves navigating customs regulations and various taxes. Here’s a comprehensive breakdown to help you understand the costs involved:

Import Duties:

• Flat Rate (Up to USD 1,500): A simplified rate of 7.5% applies to the value of your shipment if it’s below USD 1,500.
• HS Code Based (Over USD 1,500): For shipments exceeding USD 1,500, the specific duty rate depends on the product’s Harmonized System (HS) code. This code categorizes goods internationally, and Indonesia uses it to determine import taxes. You’ll need to refer to the HS code and consult Indonesian customs authorities for the exact rate applicable to your product.

Value-Added Tax (VAT):

All imported goods, regardless of value, are subject to a 10% VAT. In some cases, a reduced VAT rate between 0% and 5% might apply, calculated based on the combined value of the goods, duty, and insurance/freight costs (CIF value).

Income Tax:

The income tax on imported goods depends on whether you have an Indonesian Tax ID number. If you do, the income tax is 10%. If you don’t have a Tax ID, a higher rate of 20% applies.

Additional Considerations:

• Excise Tax: Certain goods like alcoholic beverages and tobacco products may be subject to additional excise taxes aimed at controlling their import and consumption.
• Threshold for Duty Exemption: Imports with a total value of up to USD 50 are exempt from import duties, but VAT and other applicable taxes might still apply.
• Payment Responsibility: The receiver of the imported goods is typically responsible for these taxes and duties. However, some freight forwarders might offer options for the sender to pre-pay these charges. Remember: It’s always advisable to check the HS code for your specific product and consult Indonesian customs regulations for the most up-to-date information on import duties and taxes.

Import Tax Regulations in Indonesia

Furthermore, all taxable goods for import into Indonesia have a 7.5% import duty and a 10% value-added tax. Before the implementation of PMK 199/2019, a 10% income tax applies to taxable goods and the value-added tax and import duties in Indonesia.

Therefore, thanks to these new regulations, importers must only pay 17.5% for taxable items for import into Indonesia – 9.5% fewer than the previous 27%.

Nonetheless, the regulation does not apply to certain products imported into Indonesia, such as shoes, bags, and garments. As a result, E-commerce businesses are now optimistic that this new policy will bring in more sales, improve local businesses, and decrease the country’s trade deficits.

The Exception: Batam

PMK 199/2019 applies to all regions in Indonesia. However, Batam remains a controversial region due to its status as a free trade zone area, and all goods imported into Batam are not subject to import taxes in Indonesia 2024 and Indonesia import duties – unless the goods are further distributed to other Indonesian regions from Batam.

Therefore, to continue bringing more foreign exchange to Indonesia with the international trade traffic in Batam, PMK 199/2019 only applies to imported goods released from Batam to other Indonesian regions.

Free Trade Agreements and Import Tariffs in Indonesia

In addition to the above, import tariffs from countries with trade agreements with Indonesia will differ. The first is import tariffs between Australia, New Zealand, and ASEAN countries. The second one is between South Korea and ASEAN countries. The third one is between India and ASEAN countries. And the fourth one is between China and ASEAN countries.

Restricted or Prohibited Goods to Import to Indonesia

Importing goods into Indonesia can open doors to exciting business opportunities, but navigating the regulations can feel overwhelming. This guide simplifies the process by breaking down the key aspects you need to consider for a smooth import experience.

Prohibited Items

Indonesian authorities prioritize national security, public health, and cultural heritage. To safeguard these, they strictly control the import of certain items. These are strictly banned due to their potential harm. Examples include:

• Illegal drugs and psychotropic substances
• Obscene and pornographic content
• Counterfeit items and those that infringe on intellectual property rights
• Ancient artifacts and relics
• Remote-controlled aero models that use high radio frequencies, which may disrupt security communications
• Indonesian coins governed by the Antique and Art Treasure Act of 1972
• Maps and literature with incorrect depictions of Indonesia’s borders, as mandated by the Indonesian government
• Chemicals listed under Schedule 1 of the 1993 U.N. Chemical Weapons Convention
• Wildlife products such as human skeletons, specific sea shells, beef, animal fats and oils, exotic birds (except a few specified ones), wild animals, their parts, and certain live birds and animals

In addition, antiques and certain chemicals face a complete import ban to protect cultural heritage and public safety.

Restricted Items

Importing these requires special permits and adherence to specific regulations. This category includes:

• Firearms and ammunition
• Live animals and birds, including pets
• Plants and plant products like fruits and seeds
• Endangered plant and animal species, whether alive or dead
• Goods intended for commercial purposes
• Unapproved radio transmitters
• Gold and silver, excluding jewelry
• Currency exceeding specified limits
• Telephone and telecommunication equipment with restricted frequencies
• Medicines and pharmaceutical drugs
• Specific animals, including camels, horses, and cattle
• Semi-processed animal hides and skins
• Silkworms, silkworm seeds, and cocoons
• Family planning devices (require approval from the Ministry of Health)
• Vintage items, replicas of antiques, or weapons
• Sand and soil
• Human blood plasma and certain blood-derived products
• Sandalwood, excluding handicrafts and oil products

Understanding Duties and Exemptions: How Much Will You Pay?

Most imported goods incur import duties, which are essentially taxes levied by the government. However, there are some exceptions that can save you money:

Dutiable Goods

These are items that are subject to import duties, which are essentially taxes levied by the government on the value of the imported goods. The duty amount varies depending on the specific product and its HS code (explained later). Here are some examples of dutiable goods and their associated import charges:

• Luxury Cars: Be prepared for significant additional charges ranging from 150% to 200% on top of the CIF value (Cost, Insurance, and Freight).
• Alcoholic Beverages: Expect tariffs to be applied, with rates varying between 5% and 20% depending on the type of drink you’re importing (e.g., wine, beer, spirits).
• Branded Shoes: These are subject to a specific import duty of 40%.

Exempt or Reduced Rate Goods

• Duty-Free Items: Certain essential goods, such as books, laptops, and basic electronics, are generally exempt from import duties altogether, saving you money on your import costs.
• Reduced Rates: Essential goods like alcohol and tobacco might have lower tax rates compared to luxury items. These reduced rates can be used by the government to encourage responsible consumption (alcohol) or generate revenue for public health initiatives (tobacco). However, it’s important to stay updated on the latest regulations, as these rates can change over time.

Importance of Research: Mastering the HS Code

To ensure a smooth import experience and avoid any unexpected delays or charges, researching your specific goods using the Harmonized System (HS) code is highly recommended. This internationally recognized system assigns a unique code to each product, allowing Indonesian customs authorities to efficiently determine the applicable duties and restrictions. You can find the HS code for your product through the manufacturer or online resources.

The official Indonesian customs website is another valuable resource for staying updated on the latest import regulations. Don’t hesitate to consult it for the most current information.

How does the Customs Clearance Procedure Work in Indonesia?

In the realm of international trade, customs clearance is a fundamental process. It ensures that goods can move seamlessly across borders while adhering to the regulations and requirements of the importing country. As a key player in global trade, Indonesia has well-established customs clearance procedures in place. 

Step-by-Step Procedure

The customs clearance process in Indonesia is a well-structured sequence of steps. It begins with the submission of necessary documents, followed by an examination of the cargo, an assessment of duties and taxes, and ultimately, the release of goods once all requirements are met.

Customs Duties and Taxes

Importers are often required to pay customs duties and taxes on their imported goods. These charges may vary depending on the type of goods and their value. Accurate assessment and payment of these duties are essential to avoid delays and legal issues.

Customs Valuation

Customs authorities in Indonesia determine the value of imported goods to assess taxes and import duties Indonesia. This valuation process is crucial for establishing the correct financial obligations of importers.

Inspections and Examinations

Inspections and examinations are part of the customs clearance process to ensure that the goods match the descriptions in the provided documentation. These may include physical inspections of the cargo or document reviews.

Compliance and Declarations

Importers must make accurate and truthful customs declarations. Falsifying information or attempting to evade customs duties and taxes can lead to severe consequences. Compliance with customs regulations is crucial.

Ways to Calculate Import Duties and Taxes

Importing goods into Indonesia can involve various charges, including import duties, taxes, and potential excise fees. Understanding these costs can help you accurately estimate your total import expenses and plan your budget accordingly. Here’s a breakdown of the key steps involved:

Identify Your HS Code

The Harmonized System (HS) code is a unique identifier assigned to every product category on a global scale. Indonesian customs authorities rely on this code to determine the applicable import duties and taxes for your specific goods. You can find the HS code for your product through the manufacturer, online resources, or by consulting the Indonesia Customs Tariff directly.

Estimate Import Duty

Once you have the HS code, you can estimate the import duty, which is usually calculated as a percentage of the Cost, Insurance, and Freight (CIF) value of your goods. Here’s how to calculate the CIF value:

Total Value in IDR (Indonesian Rupiah): (Total Value in USD + Total CIF) multiplied by the current IDR exchange rate. CIF: (Cost of Freight on Board + Insurance + Freight Cost) multiplied by the exchange rate.

Import Duty Formula

Import Duty = Customs Duty Tariff (based on HS code) x CIF Value

Calculate Value Added Tax (VAT)

A 10% VAT is applied to the combined value of your CIF and the import duty:

VAT = 10% x (CIF Value + Import Duty)

Factor in Article 22 Income Tax (if applicable)

This tax rate varies depending on the type of goods (typically 2.5%, 7.5%, or 10%) and is calculated as follows:

Article 22 Income Tax = Tariff (based on HS code) x (CIF Value + Import Duty)

Luxury Goods Sales Tax (LGST) (only applicable to luxury items)

Similar to Article 22 Income Tax, the LGST uses a tariff based on the HS code and is calculated on the combined value of CIF, import duty, and Article 22 tax (if applicable):

Luxury Goods Sales Tax = Tariff (based on HS code) x (CIF Value + Import Duty + Article 22 Income Tax)

Excise Tax (applies to specific excisable goods)

This tax is based on a pre-determined excise value per unit of the specific excisable good. Only consider this tax if your product falls under the excisable category.

Types of Import Permits in Indonesia

This is essential for all importers, but there are different types depending on your business activities:

• General API (API-U): For companies importing for trade purposes.
• Specific API (API-P): Needed for manufacturers importing raw materials or capital goods.
• Other variations (API-T, API-K): Exist for specific situations (direct investment, contractors).

Extra Permit for Specific Goods: NPIK (Special Importer ID)

• Required for importing sensitive goods like electronics or textiles.
• Often involves additional approvals from relevant ministries (e.g., electronics certification).

How to Obtain Import License

1. Set Up Shop: Register your business legally in Indonesia (PT or PMA).
2. Get Tax ID: Secure a Taxpayer Identification Number (NPWP).
3. Gather Documents: Prepare your business registration documents, company details, and potentially a recommendation letter from the Chamber of Commerce.
4. Choose Your Import License Type: Decide if you need a General API or a Specific API based on your import activities.
5. Apply and Wait: Submit your application with the Ministry of Trade (local office might be involved). Approval can take weeks.
6. Customs Registration: After approval, get a Customs Registration Number (NIK) for clearance.
7. Stay Compliant: Keep up-to-date on regulations, pay duties and taxes, and follow any additional requirements for your specific goods.

Remember: An API doesn’t automatically grant import rights. Some products might require extra permits or certifications.

The Procedure of Indonesian Customs

Indonesia, like many nations, has specific customs procedures to manage goods entering and leaving the country. These ensure proper duty collection and regulate border movement. Here’s a quick rundown:

Documentation Essentials

Gather key documents like invoices, certificates of origin, bills of lading, packing lists, and insurance certificates. You’ll also need the Harmonized System (HS) code for your goods and potentially a Material Safety Data Sheet (MSDS).

The Customs Process

1. Declare Your Goods: Electronically submit a detailed customs declaration for your imports/exports.
2. Valuation & Taxes: Indonesian customs will assess the value of your goods to determine import duties and taxes. Ensure accurate information to avoid delays.
3. Inspections & Permits: Be prepared for physical inspections and obtain any necessary permits or licenses for specific goods.
4. Clearance & Delivery: Once checks are complete and duties paid, your goods will be cleared for entry or export. Arrange for their transport within Indonesia or internationally.
5. Record Keeping: Maintain customs documents and transaction records for a set period, as they might be needed for audits.

Additional Considerations

• Restricted/Prohibited Goods: Be aware of limitations on certain items due to legal or safety concerns.
• Customs Brokers: Consider using a licensed customs broker to navigate the complexities and ensure compliance with Indonesian regulations.
• Duty Exemptions & Incentives: Some goods or industries may qualify for duty exemptions or incentives under government programs. Research if your imports or exports are eligible for such benefits.

Following these steps and staying informed about regulations can help ensure a smooth import or export experience in Indonesia.

Seeking Assistance: Make it Easy on Yourself with InCorp Indonesia

Navigating import regulations, especially for first-time importers, can be a complex task. If you’re feeling unsure about any aspect of importing goods, consider consulting a customs broker or freight forwarder. InCorp Indonesia, a leading provider of corporate services in Indonesia, offers a team of experienced customs brokers who can be invaluable in ensuring your shipment arrives safely and efficiently, minimizing any delays or potential issues.

InCorp Indonesia’s customs brokerage services can help you with:

• HS code classification: Ensuring your goods are categorized correctly for accurate duty calculations.
• Duty & tax calculations: Taking the guesswork out of import costs.
• Permits & licenses: Obtaining any necessary permits or licenses for restricted items.
• Customs clearance: Streamlining the clearance process for a faster import experience.

By partnering with InCorp Indonesia, you can gain peace of mind knowing your import process is in the hands of experts. Their comprehensive services and local knowledge can help you navigate the complexities of Indonesian import regulations with confidence. Focus on your core business activities while InCorp Indonesia takes care of the import logistics.