Govt unveils new excises on tobacco and alcohol

JAKARTA (JP): The government yesterday unveiled new excises on cigarettes and alcoholic drinks following the April 1 enactment of the new excise law.

The Ministry of Finance said in a statement yesterday that under Finance Minister Regulation No. 229/KMK.05/1996, effective May 1, the government will simplify the tax structure for cigarettes by reducing the number of categories from eight to four.

The top category for local firms -- with an annual production of more than five billion clove-blended cigarettes, locally known as kretek -- will pay an excise of 36 percent of the retail price for machined-rolled cigarettes and 16 percent for hand-made cigarettes.

The second tier, for producers of between 2.5 billion and five billion sticks a year, a levy of 28 percent was set for machine- rolled cigarettes and 8 percent for hand-rolled cigarettes.

Manufacturers with a production of between 28.8 million and 2.5 billion sticks a year face an excise of 24 percent for machine-rolled cigarettes and 4 percent for hand-rolled ones.

Meanwhile, those producing fewer than 28.8 million sticks a year will pay a 20 percent excise for machine-rolled cigarettes and 2 percent for hand-rolled cigarettes.

Tobacco excises are expected to bring in an estimated Rp 3.9 trillion (US$1.67 billion) in revenues for the government in the current budget year, starting April 1.

Under the previous regulations, companies producing between five billion and 15 billion cigarettes a year paid 31 percent of the retail price in excise.

Those making 15 billion to 45 billion cigarettes a year paid 34 percent, makers of 45 to 60 billion paid 36 percent and those producing more than 60 billion paid 38 percent.

Under the new structure, those selling imported non-machine- rolled kretek will pay 16 percent of the retail price in excise against the previous 18 percent.

Duties on imported machine-made filter and non-filter kretek remain unchanged at 38 percent of the retail price.

Excise on imported cigars and machine-made pure tobacco cigarettes will remain at 10 percent and 38 percent respectively.

Alcohol

In addition, the government, on May 1, will impose excises ranging from Rp 500 to Rp 50,000 per liter on all alcoholic beverages.

The government, for the purpose of excise imposition, divides alcoholic drinks into five categories.

The lowest bracket, for drinks with an alcoholic content of up to 2 percent and retail prices of up to Rp 4,000 per liter, is subject to an excise of Rp 500 per liter.

Drinks with an alcoholic content ranging from 2 percent to 7 percent and a retail price between Rp 4,000 and Rp 10,000 per liter are subject to Rp 750 excise per liter.

Beverages in the third category, with an alcohol content of between 7 percent and 20 percent and costing Rp 10,000 to Rp 60,000 per liter, are subject to an excise of Rp 1,500 per liter.

The fourth, beverages with an alcohol content of 20 percent to 45 percent, and selling for Rp 60,000 to Rp 200,000 per liter, are subject to Rp 10,000 excise per liter.

Beverages in the fifth and highest bracket, containing more than 45 percent alcohol with a retail price of more than Rp 200,000 per liter, are subject to Rp 50,000 in excise per liter. (rid)