Page 2 - Newsletter (Increase of Tobacco Product Excise Rate & Re-stipulation of Sales Taxes on Luxury Goods for Motor Vehicles)

DDTC Newsletter Vol.02 | No.08 I November 2019 Page 2 of 7

Increase of Tobacco Product Excise Rate & Re-stipulation of
Sales Taxes on Luxury Goods for Motor Vehicles

Exemption from Import Duty for Book The most current regulation governing such provision
Production Activities is the Minister of Finance Regulation No. 34/
PMK.010/2017 concerning the Withholding of Article
22 Income Tax Related to the Payments for the Supply of
The Indonesian government has provided fiscal Goods and Activities in Import or Business Activities in
incentives to encourage the growth of the national book
Other Sectors (MoF Reg. No. 34/2017).
industry. Such incentives are stipulated in Article 67 of the
Government Regulation of the Republic of Indonesia No. Financing of Potential Budget Deficit
75 of 2019 concerning Implementing Regulation of Law
Number 3 of 2017 concerning Book System (Government
Reg. No. 75/2019). The Ministry of Finance has recently issued the Minister
of Finance Regulation Number 144/PMK.05/2019
The two types of products provided with the facilities concerning the Deficit Forecasting and Additional
Financing of the State Budget (Anggaran Penerimaan dan
in the form of import duty exemptions are printing
equipment and raw materials. In addition to the import Belanja Negara/APBN) for Fiscal Year 2019 (MoF Reg.
No. 144/2019). Coming into force on 17 October 2019,
duty exemption, this industry is also entitled to tax
exemptions or reductions subject to statutory provisions. this regulation is intended to anticipate the budget deficit
that exceeds the government’s target by considering the
global economic conditions that suppress the Indonesian
The granting of these taxation facilities is in line with
economy.
the government’s efforts, both central and regional, to
develop a robust book production system, ranging from
the supply of raw materials, the production process, This regulation defines deficit as the difference between
revenue and expenditure in one reporting period, namely
distribution, and the retail price of books. In addition,
the incentive scheme is also expected to guarantee the the 2019 APBN. Accordingly, this year’s deficit is targeted

at 1.84% of Gross Domestic Product (GDP), in which the
availability of high quality, inexpensive, and accessible
1
books for the society. allowed maximum deficit outlook is 2.0% of the. GDP.
This prognosis, however, is lower than the 2018 deficit
forecast (2.12% of GDP) with a realization of only 1.76%
The book industry were previously given several types
of the GDP. Additionally, the budget deficit is limited to
of fiscal facilities, namely exemption from Value Added
a maximum of 3% of the GDP as stated in Law Number
Tax (VAT), import duties, and Article 22 Income Tax on
17 of 2003 concerning State Finances (Law on State
imports. However, the facilities are provided for several
Finances 2003). Figure 1 below shows the trend of the
types of books. For example, the VAT exemption facility
government budget deficit.
is limited to general textbooks, holy books, and religious
textbooks.
Figure 1 – Trend of Deficit in (Revised) State Budget
The provision for these indirect taxes facility is outlined
0 -1.5
in the Government Regulation Number 38 of 2003
concerning the Amendment to Government Regulation -50
-1.7
No. 146 of 2000 concerning the Import and or Supply of -100 -1.8 -1.8
Certain Taxable Goods and or Supply of Certain Taxable -150 -1.9
IDR Trillion -200 -2.1 (%GDP)
Services Exempt from Value Added Tax (Government
Reg. No. 38/2003).
-250
-2.2 -2.2
-2.3
Moreover, exemption from import duty itself is only -300
provided for the import of science books. The types -2.5
-350
-2.5 -2.5
of these books include science and technology books,
-400 -2.6 -2.7
general textbooks, holy books, and religious textbooks
imported using the Indonesian language. This is Realization of Deficit/Surplus Deficit/Surplus Ratio (Right Axis)
regulated in the Minister of Finance Regulation No. 103/
PMK.04/2007 concerning the Exemption from Import Source: Ministry of Finance (2019, processed)
Duty on the Imports of Science Books (MoF Reg. No.
103/2007)
Relief on income tax is also given to science and technology
books, general textbooks, holy books, religious textbooks,
and other science books. For those types of books, the 1 The Republic of Indonesia, Buku II Nota Keuangan beserta
Anggaran Pendapatan dan Belanja Negara Tahun Anggaran
fiscal incentive given in the form of income tax is the
2019 (Jakarta: 2018), II.6-1 – II.6-2.
exemption of Article 22 Income Tax.