8.4% VAT imposed on cigarettes

JAKARTA (JP): The Ministry of Finance said on Tuesday that the government had imposed value-added tax of 8.4 percent on the retail sales of cigarettes as of Oct. 1.

The VAT was imposed on both locally-made and imported cigarettes, the ministry said in a statement, adding that very small-scale cigarette producers were exempted from the tax.

Cigarette producers would have to pay the tax to the appointed banks when making their excise payments, the ministry said.

Cigarette producers will have to pay the tax even if they give the cigarettes to their employees or third parties as gifts.

In such cases, the tax will be charged at 8.4 percent of 50 percent of the retail price if the cigarettes are presented to employees, and 8.4 percent of 75 percent of the retail price if the cigarettes are presented to third parties.

The ministry also said that on Oct. 2, the government had introduced a rule allowing importers of raw materials for the printing of bank notes to obtain refunds for their value-added tax costs. (jsk)