Higher VAT urged on imported handsets

Higher VAT urged on imported handsets

JAKARTA (JP): Sole distributors of cellular telephones
consider the value-added tax (VAT) imposed on individual handsets
brought in from overseas as too small because it allows illegally
imported handsets to be sold on the black market.

Rahardjo Tjakraningrat, the chairman of the Indonesian
Telecommunications Association (Apnatel), announced yesterday
that the government, therefore, should increase the tax.

Imports of handsets, like other products, are subject to a 10
percent VAT. Because the price of handsets which are not equipped
with tax invoices is determined by the government at Rp 4 million
(about US$1,700) each, importers have to pay a tax of Rp 400,000.

Rahardjo said the tax should be increased to at least Rp 1
million.

"By imposing a tax of at least Rp 1 million, people will be
taught not to bring in and use illegally imported handsets,"
Rahardjo pointed out.

The government last week announced that users of cellular
phones from overseas who intend to use their handsets in
Indonesia must pay a VAT of Rp 400,000 before the unit can be
activated. This legalizes the use of an illegally imported
cellular phone.

The announcement, issued in a circular of the Director General
of Taxes on April 15, stated that the regulation was based on a
check price of Rp 4 million.

The circular said that operators of cellular phones using the
Global System for Mobile Communications (GSM) system must now
make sure that holders of handsets brought in from overseas have
paid the VAT before they are given subscriber identity module
cards which activate the cellular telephones.

The operators of GSM in Indonesia are currently PT Satelindo,
PT Telkomsel and PT Excelcomindo, while operators of the Advanced
Mobile Phone System are PT Metro Selular Nusantara, PT
Telekomindo and PT Komselindo.

The circular stated that if cellular phones are imported by
licensed operators, the amount of added-value tax will be based
on the sales price of the handsets. Because cellular telephones
currently cost between Rp 700,000 and Rp 3.5 million, the taxes
will range between Rp 70,000 and Rp 350,000.

Protection

Rahardjo, who was accompanied yesterday by the sole agents of
some 20 cellular phone brands grouped in Apnatel, said the
association welcomed the government's decision to reorganize and
protect the users of cellular phones.

The Director General of Post and Telecommunications on April
26 issued a regulation on the certification and labeling of
telecommunication devices, including cellular phones.

Rahardjo said yesterday that based on the regulation,
distributors of handsets will be required to equip each unit with
a hologram sticker indicating that the unit has gained a
certificate guaranteeing its originality and quality.

"To support this, Apnatel members have vowed either to provide
no after-sales services to unlabeled cellular phones, or provide
services at very high prices, probably by doubling the normal
rates," he said.

He said that any additional costs incurred by the labeling
will be paid by the distributors and not by the customers.

Rahardjo explained that the labeling and certification are now
underway, particularly for newly-bought handsets.

"By June, we hope all hand phones in the country will have
been certified and labeled," he said.

Rahardjo said the labeling will not increase the prices of
mobile phones, but will ensure that no illegally imported units
enter the country. (pwn)