New Regulation on Details of Cigarette Excise Tariffs
Minister of Finance Sri Mulyani Indrawati has officially released a new regulation that outlines details of the increase in tobacco excise (Cukai Hasil Tembakau/CHT) tariffs starting 1 February 2021. Said regulation refers to the Minister of Finance Regulation No. 198/PMK.010/2020 concerning Tobacco Excise Tariffs (MoF Reg. 198/2020).
CHT tariffs, as per one of the considerations under the ministerial regulation, are set based on clear, logical, and accountable parameters. The stipulation of cigarette excise tariffs also takes into account the impact and justice for society, as well as the interests of the state which focus on the benefit and expediency.
Tobacco product manufacturers are categorized into a number of manufacturer groups based on types and the amount of tobacco production as per the limit of factory production. The categories of tobacco product manufacturers are listed in Appendix I of this regulation, the details of which are indicated in Table 1.
Table 1 Categories of Tobacco Product Manufacturers
Source: Appendix I of MoF Reg. 198/2020.
Next, Article 5 states that the CHT tariffs are determined using the amount in rupiah for each stick or gram of tobacco products. The amount of CHT tariff is based on the type of tobacco product, manufacturer category, and the retail selling price (Harga Jual Eceran/HJE) limit per stick or gram. In particular, for other processed tobacco products (Hasil Pengolahan Tembakau Lainnya/HPTL), the CHT tariff is set at 57% of the HJE submitted by tobacco product manufacturers or importers as listed in Appendix II of MoF Reg. 198/2020.
The limits on HJE per stick or gram and excise tariff per stick or grams for each type of tobacco product from each category of tobacco product manufacturers are listed in Appendix III of MoF Reg. 198/2020. The classification in stipulating the excise tariff per stick or grams for each type of tobacco product is based on the type, amount of production, and HJE. HJE per retail sales package must be rounded up in multiples of IDR25.00. Details of HJE limits and excise tariffs per stick or gram of domestically produced tobacco products can be seen in Table 2.
Table 2 Limits of HJE and Excise Tariffs Per Stick or Gram of Domestically Produced Tobacco Products
Source: Appendix III of MoF Reg. 198/2020.
Furthermore, excise tariffs and the limits of lowest HJE per stick or gram for each type of imported tobacco product are listed in Appendix IV of MoF Reg. 198/2020 which is an integral part of this regulation. Details of excise tariffs and minimum HJE for imported tobacco products can be seen in Table 3.
Table 3 Excise Tariffs and Minimum Retail Selling Price of Imported Tobacco Products
Source: Appendix IV of MoF Reg. 198/2020.
Article 18 states that the head of the office may restipulate excise tariffs under several conditions. First, the restipulation is carried out by taking into account the excise tariffs that are still in effect for types of tobacco products, the categories of tobacco product manufacturers, and the minimum HJE limits set based on MoF Reg. 152/2019.
Second, the restipulated excise tariffs are in accordance with Appendix II, III, and IV of MoF Reg. 198/2020. Third, the restipulated HJE must not be lower than the prevailing HJE limits per stick or gram and may not be lower than the minimum HJE limits under Appendix II, III, and IV. When this regulation comes into effect, MoF Reg. 146/PMK.010/2017, MoF Reg. 156/PMK.010/2018, and MoF Reg. 152/PMK.010/2019 shall be revoked and declared invalid.