Addition of Cigarette Excise Layer Targeted to Take Effect Next Month

The government is targeting the addition of a new layer (tariff tier) in the structure of excise duties on tobacco products (CHT) or cigarette excise to take effect starting in May 2026. “We want it to be running by May at the latest, so that revenue comes in and I can truly ban illegal cigarettes,” said Finance Minister Purbaya Yudhi Sadewa to reporters at the Attorney General’s Office in Jakarta on Friday, 10 April 2026, as quoted from Antara. Currently, Purbaya said, the proposal for adding a new tariff layer for cigarette excise has been completed and will soon be brought to the DPR. In the proposal, the government wants to draw illegal cigarette distributors into the legal system by paying a certain excise. He also assured that for business actors who do not want to switch to the legal system, the government will take firm action by shutting down their illegal business distribution. “Later, we will give them a chance to play in the legal market. If they don’t want to, we will close them,” said Purbaya. Regarding the projection of revenue from the legalisation of illegal cigarettes, Purbaya was reluctant to give a rough projection. He promised and will provide a more precise prediction after the regulations have been running for about two months. “If it is really as big as claimed, its contribution will be very large. But, we’ll see what it’s like,” said Purbaya. “I don’t want to guess first before we see a month or two if it’s implemented like what.” Director General of Economic and Fiscal Strategy at the Ministry of Finance, Febrio Kacaribu, previously explained that his side conducted technical deepening with a legal approach as the main foundation in preparing the plan for adding a new excise layer for cigarettes. He explained that the legal approach taken by the government also considers the importance of protecting sectors that absorb a lot of labour, including the tobacco products industry. Therefore, the government is considering the possibility of opening space for business actors to operate legally by paying excise stamps according to regulations. The previous CHT tariff structure had been simplified from 19 layers in 2009 to 8 layers in 2022. The latest regulation on the CHT tariff structure is contained in Minister of Finance Regulation (PMK) Number 97 of 2024.