Gov't Increases Threshold for Free On-Board Prices on Personal Imported Goods

The Ministry of Finance issued a new regulation to raise the threshold for free-on-board prices on personal imported goods from $250 to $500 per person as part of the ministry’s efforts to improve service, Finance Minister Sri Mulyani Indrawati said on Thursday (28/12). (Photo courtesy of the Ministry of Finance)

By : Jakarta Globe | on 12:23 PM December 29, 2017
Category : Business

Jakarta. The Ministry of Finance issued a new regulation to raise the threshold for free-on-board prices on personal imported goods from $250 to $500 per person as part of the ministry’s efforts to improve service, Finance Minister Sri Mulyani Indrawati said on Thursday (28/12).

Under the regulation, imported goods with values up to $500 carried by passengers will be exempt from import taxes. The government expects to impose the new rule by the end of January.

"We want to help and provide convenience for the community […] This is part of our reform, the concrete things we continue to do for the people," Sri Mulyani said at a press conference, adding that the new regulation is not to reach revenue targets.

The customs office has heightened baggage checking at international airports throughout the archipelago in recent months as it tries to crack down on illegal importing by individuals. Those imports usually involve online sellers who take short trips to neighboring countries to buy small items like smartphones and cosmetics for resale.

The checking, however, is often the source of ire for other passengers, who find out at the gate that they need to pay extra taxes for innocuous souvenirs or shopping items they bought overseas.

Sri Mulyani said the threshold increase is quite moderate compared to other countries with higher per capita income, including Malaysia, which sets the limit to $125 per person, Thailand to $285, Singapore to $600 and China to $764.

Indonesia's per capita income was about $3,600 in 2016, according to data from the Central Statistics Agency (BPS).

Individuals who carry imported goods worth more than $500 will be charged an import tax of 10 percent and the final income tax rate (PPh), which is 7.5 percent for those who have a tax identification number (NPWP) and 15 percent for those who do not.

The rate, according to the minister, is also moderate compared to other countries that implement single tariffs, such as Singapore with 7 percent, Japan with 15 percent and Malaysia with 30 percent.

Sri Mulyani urged the Directorate General of Customs and Excise to provide an easy procedure for passengers in implementing the new regulation.

The new Finance Ministry regulation, which is currently still being processed at the Ministry of Justice and Human Rights, is a revision of the existing regulation coded from 2010 that outlines guidelines on the importation of goods carried by passengers, crew members of airlines, border-crossers and delivery goods.

 

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