Purbaya Seeks to Implement New Cigarette Excise Layer This Year
Finance Minister Purbaya Yudhi Sadewa will seek to implement an additional layer in the tobacco products excise tariff structure, or cigarette excise, this year.
However, he said the decision still needs to be discussed with the Indonesian House of Representatives (DPR RI).
“For cigarette excise, we will try to implement it this year, after I speak with parliament. We have not met yet, have not had the time,” Purbaya said during a press conference on the Draft State Budget and Financial Note for the 2027 fiscal year at the Directorate General of Taxes headquarters in Jakarta, quoted on Sunday, 16 August 2026.
“After 17 August, we will meet with the DPR to confirm the tobacco excise,” he said.
He explained that the tobacco excise policy aims to draw illegal cigarette circulation into the legal ecosystem by imposing specific excise duties. The government will also take firm action against those who refuse to switch to the legal system by shutting down their illegal business operations.
Customs and excise revenue in the 2027 Draft State Budget is targeted at Rp316.6 trillion, a correction of 1.2 percent from the 2026 State Budget projection of Rp320.6 trillion. Meanwhile, tax revenue is targeted at Rp2,591.4 trillion, growing 12.1 percent from the 2026 State Budget projection of Rp2,310.8 trillion.
As such, the total tax revenue target is set at Rp2,908 trillion, up 10.5 percent from the 2026 State Budget projection of Rp2,631.4 trillion.
Purbaya explained that factors influencing next year’s tax revenue include the projected economic performance in 2027, the sustainability of tax reform, and the risk of commodity price volatility.
Tax policy is focused on four main strategies. First, strengthening the sustainability of tax reform and harmonising international tax policies. Second, improving compliance through technology, synergy, and law enforcement.
Third, strengthening a conducive and equitable digital economy tax system. Finally, targeted incentives to encourage investment and downstream processing.