Indonesia - To Create A Level Playing Field, The Indonesian Government Will Lower Import Duty Exemption On E-Commerce.
Legal News & Analysis - Asia Pacific - Indonesia - Tax
12 February, 2020
The Indonesian government has announced through a press release that it intends to create a level playing field and to have fair taxation treatment between domestic industries and importers.
The Ministry of Finance will lower the threshold for import duty exemption on e-commerce from USD 75 to become USD 3 per consignment note. Import taxes will remain unchanged, i.e., there will be no minimum threshold. But the taxation rate will be reduced from the current ±27.5% - 37.5% to a rate of 17.5%, which will consist of (i) 7.5% import duties, (ii) 10% VAT and (iii) 0% corporate income tax.
The Indonesian government has paid specific attention to certain commodities with high demand, i.e., bags, textile products and shoes, and will apply different import tariffs for these products. The minimum threshold of USD 3 will still apply to these products, and the excess value will be subject to normal tariffs (Most Favored Nation tariffs), i.e.:
- import duties of bags 15% - 20%, shoes 25% - 30%, and textile products 15% - 25%
- VAT of 10%
- corporate income tax of 7.5% - 10%
This policy for high demand commodities is intended to create fair taxation treatment and a level playing field between domestic industries that are subject to tax and parties that import products through consignment or cargo.
The Indonesian government will also invite marketplace platforms to cooperate with Indonesian Customs for the purpose of transparency, which will allow marketplace platforms to provide data on e-commerce transactions to the Indonesian Customs system. This is intended to remove/minimize under-invoicing and misdeclaration practices when declaring goods to customs.
A new Ministry of Finance Regulation on this matter is currently being drafted and it is expected to be issued within January 2020.
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