Purbaya targets addition of new cigarette excise layer effective May 2026

Jakarta (ANTARA) - Finance Minister Purbaya Yudhi Sadewa has targeted the addition of a new layer (tariff tier) in the structure of excise duties on tobacco products (CHT) or cigarette excise, starting from May 2026.

“We want it to be up and running by May at the latest, so that revenue flows into our coffers and I can truly crack down on illegal cigarettes,” Purbaya told reporters at the Attorney General’s Office in Jakarta on Friday.

Purbaya said he has finalised the proposal for adding the cigarette excise layer and will soon bring it to the DPR.

In the proposal, Purbaya aims to draw illegal cigarette distributors into the legal system by paying a certain excise duty.

For those who do not wish to switch to the legal system, Purbaya assured that they will be dealt with firmly by shutting down their illegal business operations.

“We will give them a chance to operate in the legal market. If they don’t want to, we will shut them down,” he emphasised.

Regarding projections for revenue from the legalisation of illegal cigarettes, Purbaya was reluctant to provide a rough estimate and said he would give a more precise prediction later after the regulations have been in place for about two months.

“If it’s really as big as claimed, the contribution would be huge. But we’ll see what it’s like. I don’t want to guess before we see how it’s implemented for a month or two,” the Finance Minister stated.

Previously, Director General of Economic and Fiscal Strategy Febrio Kacaribu explained that the Ministry of Finance has conducted in-depth technical studies with a legal approach as the main foundation in preparing the plan for adding the new cigarette excise layer.

According to Febrio, the government’s legal approach also considers the importance of protecting sectors that absorb a lot of labour, including the tobacco industry. Therefore, the government is considering opening opportunities for business actors to operate legally by paying excise stamps in accordance with the regulations.

For information, the CHT tariff structure has been simplified from 19 layers in 2009 to eight layers in 2022. The latest regulations on the CHT tariff structure are contained in Minister of Finance Regulation (PMK) Number 97 of 2024.