Significant Increase of Excise Tariff for Alcoholic Beverages

The excise tariff for alcohol beverages has been significantly, if not exceedingly increased by Minister of Finance Regulation No. 62/PMK.011/2010 on the Excise Tariff for Ethyl Alcohol, Beverages, and Concentrate with Ethyl Alcohol Content. The regulation repeals and replaces (1) Minister of Finance Regulation No. 89/PMK.04/2006 on the Determination of Excise Tariffs for Ethyl Alcohol and Ethanol, and (2) Minister of Finance Regulation No. 90/PMK.04/2006 on the Determination of Excise Tariffs for Beverages and Concentrate with Ethyl Alcohol Content.

For beverages under 5% alcohol volume (i.e., beer), the tariff for both domestic and foreign products will be IDR 11,000 per liter; previously it was between IDR 2,500 to 5,000.

Beverages between 5% and 20% alcohol volume (i.e., wine and champagne) are subject to an IDR 30,000 tariff per liter if domestically-produced, or an IDR 40,000 tariff if imported; previously, it was IDR 5,000 and IDR 30,000 per liter for each category respectively.

Beverages with upwards of 30% alcohol volume are subject to an IDR 75,000 tariff per liter if domestically-produced, or IDR 130,000 per liter if imported.

Whether domestic or imported, concentrate with ethyl alcohol content increased from IDR 50,000 to IDR 100,000 per liter.

Apart from the tariff increase itself, procedures for tariff imposition remain largely the same. To accommodate the tariff value change however, a new Director General of Customs and Excise Regulation (No. P-22/BC/2010 on the Procedures for Imposition of Excise for Ethyl Alcohol, Beverages, and Concentrate with Ethyl Alcohol Content) was released.

Under that regulation, domestic producers or importers of alcoholic beverages file for application to the Directorate General of Customs and Excise for determination of tariff obligations. The application requires supporting documents set out by Article 3 (1 & 2) of the regulation, and the Head of the Customs and Excise Service Office will issue a response within 5 days of the application’s submission. Excise duty will be imposed when the beverages leave either the factory, storage facility, or customs area. Meanwhile, the form for application, and the guide to calculation of retail prices are contained in the in that Regulation’s Attachments.

Unsurprisingly, both producers and retailers of alcoholic beverages have protested the policy. Ipung Nimpuno of the Indonesian Malt Beverage Industry Association told reporters at a Jakarta press conference (23/3) that it will essentially cause a 20% to 40% increase in the sale price for alcohol beverages, and that both producers and retailers will have to reconsider their business and employment plans for the future.

Both the Minister of Finance Regulation, and the Directorate General of Customs and Excise Regulation come into effect on 1 April 2010.