Customs' Statement on the Plan to Add Excise Tax Layers for Cigarettes

The government is formulating the details of a policy to add layers or tiers to the tariff structure for tobacco product excise or cigarette excise. Head of the Public Relations and Outreach Sub-Directorate of the Directorate General of Customs and Excise under the Ministry of Finance, Budi Prasetiyo, could not yet confirm whether the additional layer would apply only to illegal cigarette producers or to legal cigarette business operators. What is certain, said Budi, is that Customs and Excise will follow the provisions and criteria set by the government. “For cigarette factories that meet those criteria, the service for ordering excise stamps will be carried out in accordance with applicable regulations,” he told Tempo on Tuesday, 14 April 2026. According to Budi, every policy in the tobacco excise sector is formulated by considering balance. From controlling consumption, industry sustainability and workforce, state revenue, to handling illegal cigarettes. When asked about the effectiveness of adding layers to suppress the circulation of illegal cigarettes, Budi said that law enforcement against violations will continue to be carried out. However, there are many challenges in the tobacco product ecosystem that need to be managed in a balanced manner. Not only the issue of illegal cigarette circulation, but also the dynamics of shifting consumption to cheaper products. “Therefore, various policy options need to be considered as part of a comprehensive approach,” said Budi. “The risk of shifting consumption to cheaper products is certainly one of the concerns.” The government plans to add cigarette excise layers to optimise state revenue while suppressing the circulation of illegal cigarettes. Finance Minister Purbaya Yudhi Sadewa targets this policy to take effect from May 2026. Currently, the government regulates the cigarette excise tariff structure under Minister of Finance Regulation Number 97 of 2024 on the Third Amendment to PMK Number 192/PMK.010/2021 concerning Excise Tariffs for Tobacco Products in the Form of Cigarettes, Cigars, Clove Cigarettes or Leaf Cigarettes, and Cut Tobacco. The regulation explains that the tariff layers are divided into machine-made clove cigarettes (SKM) in groups I and II; machine-made white cigarettes (SPM) in groups I and II; and hand-rolled clove cigarettes (SKT)/hand-rolled white cigarettes (SPT) in group III. In addition, there are filter hand-rolled clove cigarettes (SKTF)/filter hand-rolled white cigarettes (SPTF) that use specific tariffs, as well as leaf/clove cigarettes (KLM) and cut tobacco (TIS) with special tariff layers. By adding tariff layers, Purbaya wants illegal cigarette business operators to enter the legal system through certain excise payments. For those who refuse, business closure sanctions are prepared. “So that income comes to us and I can truly prohibit illegal cigarettes,” said Purbaya at the Attorney General’s Office on Friday, 10 April 2026, as quoted by Antara. The plan is rejected by the Center for Indonesia’s Strategic Development Initiatives or CISDI. CISDI Tobacco Control Project Lead Beladenta stated that adding cigarette excise tax layers is not a solution. “Adding cigarette excise layers is the same as flooding the market with cheap cigarettes,” Beladenta told Tempo on Monday, 13 April 2026. Beladenta said the policy is not beneficial because it has a negative impact on public health as well as state revenue. Because when cheap cigarettes are accommodated by the additional layer excise policy, smoking prevalence has the potential to rise. Meanwhile, state revenue has the potential to plummet because smokers will buy more cheap cigarettes. “Downtrading makes state revenue not optimal because income comes from the low group,” said Beladenta.