Import duty calculation and ‘check price’ system
Import duties and other domestic taxes (see below) are based on the CIF value; that is, the landed cost in an Indonesian port, including freight and insurance.
As a result of under-declaration of import values by some importers, Indonesian Customs implemented a ‘check price’ system in 2002 to assess duties on all food product imports. In addition they switched some ad valorem duties to specific duties (see above).
This system means that Indonesian officials have the discretion to assess what they consider a realistic valuation. This can be higher than the value declared by importers.
An income tax is levied at 2.5% of the CIF value of imports.
Value added tax (VAT or PPN) is levied on almost all goods, including imports, at a rate of 10%.VAT applies to processed food products but not to fresh foodstuffs.
A luxury tax of between 10% and 75% is levied on certain products—whether imported or produced domestically. Food products subject to luxury tax are:
- Yoghurt, cheese and butter: 10% luxury sales tax
- Alcoholic beverages: 40–75%. 34
As of early 2004, reforms to the tax system were under consideration.
Importer registration and income tax
There are two type of importers, producer importers and general importers. All importers are required to register with the Ministry of Finance and Customs and Ministry of Industry and Trade and obtain a Tax registration number and an importers identity number (API) from the Ministry of Trade and Industry. 35
As of late 2003, Indonesia had about 7 000 registered importers, although up to 20% were thought likely to lose their licenses as a result of their failure to report required company data during recent anti-smuggling checks.
Basic documentation requirements for import shipments include:
- import declaration
- pro-forma invoice
- commercial invoice
- certificate of origin
- Bill of lading legalised by the carrier
- insurance certificate
- further certification for specified products
- packing list.
Alcoholic Beverages: A Special Case
Imports of alcoholic beverages are regulated more strictly than most other food and beverages. However, Indonesia is a significant market for Australian wine, especially for the hotel / food service and duty free sectors. Exports of Australian wine to Indonesia in the twelve months to January 2004 were valued at A$3.51 million. 36
Indonesia’s Ministry of Industry and Trade maintains a quota system for imports of alcoholic beverages in each of the following categories:
- beverages with alcoholic content between 1–5%
- beverages with alcoholic content between 5–20%
- beverages with alcoholic content between 20–55%.
There is only one approved importer of wine, spirits and beer: PT Dharma Niaga, a State-owned trading company. It replaced the former private monopoly of PT Rajawali Nusantara in 1997.
As of late 2003, there were seven registered distributors. For details of these distributors, see Appenix.5. These new distributors are still relatively small and usually specialise in one category of alcoholic drinks, either by country of origin or by type. For example, Geka Narasutra specialises in only gin and vodka, Esham Dima on tequila, while Danisa Texindo specialises in wine and beer from Korea only. Trima Nunggal Mandiri Indonesia (formerly PT Tebet Indraya) is the longest established distributor and remains the only distributor that handles all kinds of alcoholic drink imports.
A number of regional administrations have imposed local restrictions on trading in alcoholic beverages. There may also be moves in the national Parliament to further restrict the trade, or at least to impose particular trading arrangements other than the present ones. Such arrangements are generally sought on religious grounds. Advertising and promotion of alcoholic drinks in Indonesia is severely restricted.
Indonesia prohibits the import of the following items:
- endangered species of wild flora and fauna and parts thereof
- certain dangerous species of fish and
- food and beverage items not registered with the Ministry of Health.
Import licences are required for certain food products. These include:
- rice and sugar (since 2002)
- bulk dairy products including powdered milk, buttermilk and uncured cheese
- all chilled and frozen pork products
- alcoholic beverages.
In January 2004, new regulations were introduced tightening the implementation of the rice licensing system.
Licenses for processed food and beverage products are issued by the Ministry of Trade and Industry, while those for unprocessed agricultural products are issued by the Ministry of Agriculture.
The WTO’s May 2003 review of Indonesia’s trade policy noted that Indonesia had not updated information on import licensing requirements available to the WTO since 1998.
Restricted import rights
In addition to the state-owned importer of alcoholic beverages mentioned above, the other state trading organisation, which traditionally played an important role in food imports, is BULOG (Badan Urusan Logistik or the National Logistics Agency). This is a 100% state-owned trading enterprise. In 1999, BULOG’s rice import monopoly was eliminated, however, it continues to stabilise domestic prices through its market intervention activities.