Imposition of Import Duty Tariffs on Imported Goods between Indonesia and EFTA States

s R. Herjuno Wahyu Aji
s Fakry
By R. Herjuno Wahyu Aji, Fakry
R. Herjuno Wahyu Aji
Fakry
The Ministry of Finance has issued provisions on procedures for the imposition of import duty tariffs on imported goods based on the economic partnership agreement between Indonesia and member states of the European Free Trade Association (EFTA). The policy is outlined in the Procedures for the Imposition of Import Duty Tariffs on Imported Goods Based on the Comprehensive Economic Partnership Agreement between the Republic of Indonesia and EFTA States (MoF Reg. 122/2021).
 
This latest regulation has been issued to encourage the acceleration of economic recovery, provide legal certainty in the service of customs activities on imported goods, and enhance comprehensive economic partnership between Indonesia and EFTA member states. As per Article 2 paragraph (1) of MoF Reg. 122/2021, imported goods may be subject to preferential tariffs, the amount of which may differ from the statutory import duty tariffs (Most Favored Nation/MFN). The preferential tariffs are imposed on the following five things:
  1. import of goods for use using an import customs notification in the form of an Import Declaration (Pemberitahuan Impor Barang/PIB);
  2. import of goods for use using import customs notification in the form of import declaration from the Bonded Storage Area (Tempat Penimbunan Berikat/TPB), which upon the entry of goods to TPB, approval to use preferential tariffs has been obtained;
  3. import of goods for use using import customs notification in the form of import declaration from the Bonded Logistics Center (Pusat Logistik Berikat/PLB), which upon the entry of goods to PLB, approval to use preferential tariffs has been obtained;
  4. release of goods produced from the free trade zone to other places within the customs area (Tempat Lain Dalam Daerah Pabean/TLDDP) insofar as the raw materials and/or auxiliary materials originate from outside the customs area, approval to use preferential tariffs has been obtained upon entry of goods into the free trade zone, and is carried out by entrepreneurs in the free trade zone that have met the requirements as entrepreneurs allowed to use preferential tariffs;
  5. release of goods from Special Economic Zones (SEZ) (Kawasan Ekonomi Khusus/KEK) to TLDDP, which upon the entry of goods to SEZ, approval to use preferential tariffs has been obtained.
Entrepreneurs in free trade zones referred to in point (iv) above, on the other hand, must meet the following requirements;
  1. having a business license from the Free Trade Zone Management Board (Badan Pengusahaan Kawasan);
  2. importing raw materials and/or auxiliary materials, and at the same time releasing manufactured goods to TLDDP;
  3. owning and implementing a computer-based inventory information system (IT Inventory) that can be accessed online and in real-time by the Directorate General of Customs and Excise (DGCE), with the approval of the supervising Head of the Customs Office;
  4. having customs access; and
  5. submitting the conversion of raw materials into manufactured goods and a blueprint for the production process with approval from the supervising Head of the Customs Office, when the goods are to be released to TLDDP.
Furthermore, this regulation also stipulates the provisions on the origin of goods which consist of three criteria. First, the origin criteria. The origin criteria include goods that are wholly obtained or produced in one member state or goods that are not wholly obtained or produced in a member state, or goods produced exclusively in a member state using materials originating from one or more member states.
 
Second, the consignment criteria. The consignment criteria implies that imported goods are sent directly from member states that issue the Declaration of Origin of the Comprehensive Economic Partnership Agreement between the Republic of Indonesia and EFTA States (DAB IE-CEPA) into the customs area. In addition, there is another criterion, such as the policy of shipping imported goods through member states other than the exporting and importing member states or shipping imported goods through countries other than member states.
 
Third, procedural provisions. The procedural provisions are related to the issuance of DAB IE-CEPA. DAB IE-CEPA may be prepared before or after the date of shipment or date of export. In the event that the bill of lading, airway bill, or land transportation document contains the date of issuance and the date of loading of goods into the means of transport, the date of shipment or export is determined when the goods are loaded into the means of transport.
 
As per Article 9 paragraph (1) of MoF Reg. 122/2021, to use preferential tariffs, importers are required to submit the original DAB IE-CEPA sheet or printout of DAB IE-CEPA and correctly include the facility code for the comprehensive economic partnership agreement between Indonesia and EFTA states on the PIB. In addition, importers are required to correctly include the exporter authorization number or reference number from the invoice or other commercial documents and the date of DAB IE-CEPA preparation on the PIB.
 
Next, TPB and PLB operators/entrepreneurs wishing to use preferential tariffs must carry out the following four things:
  1. submitting the original DAB IE-CEPA sheet or its printout to the customs and excise official at the customs office that supervises TPB or PLB no later than three working days after the import declaration to be stockpiled at TPB or PLB obtains Custom Clearance Approval (Surat Persetujuan Pengeluaran Barang/SPPB);
  2. in the event of having been designated as the main customs partner, the organizer/entrepreneur of TPB or PLB is obliged to submit the original DAB IE-CEPA sheet or its printout to the customs and excise official at the customs office that supervises the TPB or PLB no later than five working days after the import declaration to be stockpiled at TPB or PLB obtains an SPPB;
  3. correctly including the facility code for the comprehensive economic partnership agreement between Indonesia and EFTA states on the import declaration to be stockpiled at TPB or PLB; and
  4. correctly including the exporter authorization number or reference number from the invoice or other commercial documents and the date of DAB IE-CEPA preparation on the import declaration to be stockpiled at TPB or PLB.
To be eligible to use preferential tariffs, entrepreneurs in free trade zones are required to submit the original DAB IE-CEPA sheet or its printout and printout of Free Trade Zone Customs Declaration (Pemberitahuan Pabean Free Trade Zone/PPFTZ) for the entry of goods into the free trade zone from outside the customs area. In addition, entrepreneurs in free trade zones are required to correctly state the facility code, exporter authorization number, and reference number from the invoice or other commercial documents on PPFTZ-01 for the entry of goods into the free trade zone from outside the customs area.
 
After the abovementioned obligations have been fulfilled, the customs and excise official at the customs office verifies DAP IE-CEPA in the context of imposing preferential tariffs on imported goods. In verifying, the customs and excise official may request information from importers, TPB operators/entrepreneurs, PLB operators/entrepreneurs, entrepreneurs in free trade zones, or SEZ business entities/entrepreneurs. Repeated verification or customs audit may be carried out on the imposition of preferential tariffs on imported goods using DAB IE-CEPA as per applicable regulations.
 
DAB IE-CEPA is verified in terms of the imposition of preferential tariffs by taking into account seven components cumulatively. First, the fulfillment of the origin criteria. Second, the fulfillment of the consignment criteria. Third, the fulfillment of procedural provisions. Fourth, the type, quantity, and classification of goods eligible for preferential tariffs. Fifth, the amount of import duty tariffs notified based on the preferential tariffs stipulated in the ministerial regulation concerning the stipulation of import duty tariffs in the context of the Indonesia-EFTA comprehensive economic partnership agreement.
 
Sixth, the conformity between the data on the import declaration and/or complementary customs documents with the data on the DAB IE-CEPA. Seventh, the conformity between the physical nature of goods and the description of the goods notified on the import declaration, and/or DAB IE-CEPA, and/or Complementary Customs Documents, in the event that the imported goods are subject to physical examination.
 
In the event that verification results indicate that the imported goods do not meet one or more of the origin criteria pertaining to point one, two, and three above, DAB IE-CEPA shall be rejected and the imported goods are subject to statutory import duty tariffs. If the verification results in points four to seven show that the total number of goods listed in the import declaration is greater than the number of goods listed in DAB IE-CEPA, the excess number of goods is subject to statutory import duty tariffs.
 
Statutory import duty tariffs also apply when the verification results in points four to seven indicate that the specifications of the goods listed in the import declaration differ from those listed in DAB IE-CEPA. In the event that the verification results in points four to seven indicate any discrepancy between the physical nature of goods and the description notified in the import declaration, DAB IE-CEPA, and/or complementary customs documents, the imported goods shall also be subject to statutory import duty tariffs.
 
Next, if the notified preferential tariff differs from the tariff that should otherwise be imposed, the import duty tariff on imported goods is determined based on the regulations concerning the stipulation of import duty tariffs in the framework of the comprehensive economic partnership agreement between Indonesia and EFTA states.
 
Further, as per Article 21 of MoF Reg. 122/2021, imported goods originating from member states with a free on board (FOB) value not exceeding USD200 may be subject to preferential tariffs without having to attach DAB IE-CEPA. Preferential tariffs may be granted insofar as the import is not intended to avoid the obligation to submit DAB IE-CEPA and is evidenced by a statement from the exporter.
 
Preferential tariffs are only imposed on goods imported using PIB documents. In addition, preferential tariffs may be granted to goods shipped by an exporting member state for exhibition purposes in other member states and sold during or after the exhibition.
 
On another note, preferential tariffs cannot be granted if DAB IE-CEPA is cancelled by the exporter. In addition to the above provisions, this regulation also stipulates procedures for the verification of DAB IE-CEPA, monitoring and evaluation, and other provisions. Promulgated on 14 September 2021, MoF Reg. 122/2021 takes effect 30 days thereafter.