Tobacco Excise Tariff Effective January 1, 2017

The Indonesian government implemented Ministry of Finance Regulation (PMK) Number 147/PMK.010/2016, amending the third time Ministry of Finance Regulation Number 179/PMK.011/2012 concerning Excise Tariffs on Tobacco Products, effective January 1, 2017. The weighted average increase in cigarette excise duty was 10.54 percent, with the highest tariff increase of 13.46 percent for Machine-Made White Cigarettes (SPM) and the lowest increase of 0 percent for Hand-Rolled Kretek Cigarettes (SKT). In addition to the excise tariff increase, the government also raised the retail price of cigarettes by an average of 12.26 percent.

Besides increasing tax revenue, the tariff increase aims to control consumption and monitor the distribution of cigarettes. Over the past 10 years, the Ministry of Finance, through the Directorate General of Customs and Excise, has reduced the number of cigarette factories from 4,669 to 754 in 2016.

The highest excise tariffs are: Rp 530 per stick/gram for Machine-Made Kretek Cigarettes (SKM); Rp 555 for SPM; Rp 345 for Hand-Rolled Kretek/White Cigarettes (SKT/SPT); Rp 530 for Filtered Hand-Rolled Kretek/White Cigarettes (SKTF/SPTF); Rp 28 for Sliced Tobacco (TIS); Rp 28 for Klobot Cigarettes (KLB); Rp 22 for Menyan Kelembak Cigarettes (KLM); Rp 110 for Other Processed Tobacco Products (HPTL); and Rp 110,000 per stick/gram for Cigars (CRT).