How to Calculate Customs Duty and Import Tax in Indonesia (Tax Calculator Included)

Most goods imported to Indonesia are subject to import duty. What are the prerequisites of becoming an importer in Indonesia, which import taxes apply, and how to calculate customs duty and import tax in Indonesia? Table of contents Customs duty and import taxes in Indonesia The applicable import duties depend on the type of product […]

Calculating import tax in Indonesia

Most goods imported to Indonesia are subject to import duty. What are the prerequisites of becoming an importer in Indonesia, which import taxes apply, and how to calculate customs duty and import tax in Indonesia?

Table of contents

    Customs duty and import taxes in Indonesia

    The applicable import duties depend on the type of product you want to import to Indonesia. The total tax of imported goods is also known as the PIB (Pemberitahuan Impor Barang – Declaration of Imported Goods).

    Three main types of taxes apply when importing goods to Indonesia:

    Tax

    Tax rate

    Import Duty

    Rates vary from 0-450%, depending on the HS Code of the goods

    Value-Added Tax (VAT)

    10%

    Income Tax

    2.5% or higher for specific products

    If your products are considered luxury goods, they are also subject to Luxury Tax, which rate depends on the type of product.

    For example:

    • Luxury cars (150% – 200%)
    • Yachts (75%)
    • Luxury motorcycles (60%-125%)
    • Alcohol beverages (5%-20%)
    • Branded shoes (40%)

    Note that the tax calculation system in Indonesia is quite complicated. Therefore, it is wise to seek advice from local consultants before you import your products to Indonesia to prevent any unpleasant and costly surprises from arising.

    Contact our import consultants at [email protected] for a personal consultation to find out which import taxes apply to your products.

    Documents required for importing goods to Indonesia

    Indonesia’s customs clearance needs the following documents to be for products to enter the Indonesian territory:

    • Packing List
    • Bill of Lading/ Air Waybill
    • Insurance Policy
    • Receipt of payment of import duty and import-related taxes (SSPCP)
    • Power of Attorney if submitted by Customs Broker
    • HS codes of the products

    Customs clearance procedure in Indonesia

    Once the goods have arrived at the Indonesian customs zone, the customs officials will place your products in one of the three different customs areas:

    Green channel

    Yellow channel

    Red channel

    Your products are good to go

    Some additional documents are required*

    Physical inspection is needed*

    One day

    2-3 days

    Up to 7 days, may require re-import

    * May incur storage costs

    Some common reasons why goods get stuck in the red channel in Indonesian customs are:

    • First-time importers
    • Incomplete documents
    • High-risk assets or originating from high-risk countries
    • Red channel inspection (performed selectively)

    To prevent your goods from getting stuck in the red channel, you can import your products to Indonesia using Emerhub’s importer of record (IOR) service.

    In this way, you don’t have to obtain any import licenses in Indonesia nor worry about the customs clearance procedure as Emerhub will take care of everything on your behalf.

    However, if your products are already stuck in Indonesian customs, Emerhub can help you sort out a solution. We are working with the customs daily, and we have a 100% success rate of clearing goods from the Indonesian customs.

    Contact us at [email protected].

    Forbidden goods for import in Indonesia

    Indonesian import regulations also prohibit certain products from entering Indonesia. The Restricted and Banned Goods list, also known as the LARTAS list regulates these products.

    These items are, for example:

    • Narcotics and drugs
    • Pornographic materials
    • Politically Sensitive materials; printed papers, pictures
    • Firearms, explosives, ammunition (need a special permit)
    • Guns, sports weapons/hunting rifles (need a special license)

    According to Indonesian laws, trying to import those goods can result in substantial sanctions and even imprisonment.

    How to calculate the total cost of import in Indonesia

    To calculate the total import tax, you will first need to convert the total value of the goods to Indonesian Rupiah using the following formula:

    TOTAL VALUE IN IDR= (Total Value in USD + Total CIF*) x IDR exchange rate

    *CIF= (Freight on Board + Insurance + Freight Cost) x exchange rate

    The calculation formula for total import tax and duty:

    Import Duty + VAT + Income Tax where:

    Type of Tax

    Calculation method

    Import Duty

    Total value in IDR x percentage of import duty

    VAT

    (Total value in IDR + Import Duty) x 10%

    Income Tax

    (Total value in IDR + Import Duty) x percentage of Income Tax

    An example of how to calculate customs duty and import tax in Indonesia

    To understand all the expenses related to importing goods to Indonesia, we have put together an example of a company importing milk powder to Indonesia.

    Import-Tax-Calculation_2

     Import tax calculator

    If you want to estimate your import costs, use the calculator below:

    Result
    FOB: USDCIF: Rp
    Insurance + Freight Cost: USDImport Duty: Rp
    Excange Rate: RpVAT: Rp
    Import duty tariff:%Income Tax: Rp
    Tax:Total: Rp

    Frequently asked questions about import to Indonesia

    #1 What is the maximum tax-free amount for ordering goods online in Indonesia?

    As per the new regulations released in September 2018, the maximum tax-free amount for importing products to Indonesia is USD 75, including CIF.

    #2 How much is the import tax if I buy more than USD 75 worth of goods online?

    If you want to import goods that are worth more than USD 75, but less than USD 1,500, the import charges are the following:

    1. Import Duty 7.5% (flat rate on all products)
    2. Value-Added Tax 10%
    3. Income Tax (10% if you have an Indonesian Tax ID, 20% if you don’t have an Indonesian Tax ID)

    If your shipment is worth more than USD 1,500, regular import taxes based on the product’s HS Code apply.

    #3 Can I import goods to Indonesia if I don’t have the required additional documents?

    No, you must have all the required documents. If you don’t have the necessary licenses, Emerhub can help you.

    How to import to Indonesia?

    To start importing to Indonesia, you need to have a company in Indonesia. Therefore, you have two options for importing to Indonesia:

    1. Set up an import company in Indonesia
    2. Use an Importer of Record (IOR)

    Option 1: Set up an import company in Indonesia

    Foreign investors can set up 100% foreign-owned import companies in Indonesia. The incorporation process of a foreign-owned limited liability company (PT PMA) with import classification generally takes up to 6 weeks.

    For a more in-depth explanation as well as the necessary documents, read our guide to setting up an import company in Indonesia. Note that if you plan to be also a distributor, you will additionally need to rent a warehouse to incorporate the company.

    Import licenses in Indonesia

    Previously, import companies in Indonesia that were aiming to import goods to be traded in Indonesia were required to obtain a General Importer Identification Number (API-U) and a Customs Identification Number (NIK).

    However, with the implementation of the One Single Submission System (OSS), Indonesia removed this requirement and companies will receive an Identification Number to Operate (NIB) which now also serves as an API-U as well as a NIK.

    If you plan to import goods for your production, you need to obtain a Producer Importer Identification Number (API-P).

    Option 2: use Importer of Record (IOR) service

    An importer of record (IOR) is a service provider that allows you to import your products to Indonesia without acquiring any import licenses nor setting up a company here.

    Watch Marlissa Dessy, the Director of Emerhub, explain the essence of the importer of record service:

    To get started with using Emerhub’s importer of record service, all you need to send us is:

    • Packing List
    • Commercial Invoice
    • Air Waybill (for air freight) or Bill of Lading (for sea freight)

    Getting started as an importer in Indonesia

    If you wish to establish an import company in Indonesia, you need to plan at least a few months since getting the company incorporated and acquiring licenses will take some time.

    If you want to import faster or don’t want to establish an import company in Indonesia, you can start importing goods immediately by using our importer of record service.

    To get started, contact us via the form below to book a complimentary consultation to determine the best practice for you.

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