A new governmental regulation stipulates the import duties in Indonesia has been effective since January 30, 2020. This regulation is the Finance Ministerial Regulation (PMK) No.199/2019 and it was enacted to reduce the maximum value for imported goods to be tax-free.
According to PMK 199/2019 issued by the Ministry of Finance, the maximum value of tax-free items for import into Indonesia will be decreased from the previous US$75 to US$3 for each shipment.
Furthermore, all taxable goods for import into Indonesia have a 7.5% import duty and a 10% value-added tax. Before the implementation of PMK 199/2019, a 10% income tax applies to taxable goods in addition to the value-added tax and import duty.
Therefore, thanks to these new regulations, importers now only have to pay 17.5% for taxable items for import into Indonesia – 9.5% fewer than the previous 27%.
Nonetheless, the regulation does not apply to certain products imported into Indonesia such as shoes, bags, and garments. E-commerce businesses are now positive that this new policy will bring in more sales and also improve local businesses and decrease the country’s trade deficits.
The Exception: Batam
PMK 199/2019 applies to all regions in Indonesia. However, Batam remains a controversial region. This is because it is a free zone area and all goods imported into Batam are not subject to import taxes and duties – unless the goods are further distributed to other Indonesian regions from Batam.
Therefore, to continue bringing in more foreign exchange to Indonesia with the international trade traffic in Batam, PMK 199/2019 only applies to imported goods released from Batam to other Indonesian regions.
Free Trade Agreements and Import Tariffs
In addition to the above, import tariffs from countries that have trade agreements with Indonesia will be different. The first one is import tariffs between Australia, New Zealand, and ASEAN countries. The second one is between South Korea and ASEAN countries. The third one is between India and ASEAN countries. And, the fourth one is between China and ASEAN countries.
For detailed import tariffs between the countries mentioned above, contact our dedicated team of consultants.
How to Start an E-commerce Business in Indonesia
The import into Indonesia has jumped from 19.6 million items to 50 million items in just a year between 2018 and 2019. Therefore, it is obvious that e-commerce is a potentially huge industry in Indonesia that is hard to overlook.
For investors to start an e-commerce business in Indonesia, here’s the summary of the requirements and obligations:
Requirements to Start an E-Commerce Business in Indonesia
- Obtain a business license via the Indonesian Online Single Submission System
- Obtain technical licenses, taxpayer number and comply with other business requirements
- Assist in governmental programs
- Give honest, complete, and valid information to the authorities. For instance, the electronic system, service conditions, guarantees, identities of legal subjects, etc.
Updated regulations on Setting Up an E-commerce Business in Indonesia
Obligations for Customer Protections
E-commerce businesses are obliged to comply with the following is related to customer protections:
- Customer complaint procedure including the follow-up mechanism
- Customer’s address and phone number
- Complaint handling from a competent person
- The time necessary for complaint settlement
How Cekindo Can Assist
You can import into Indonesia and set up an e-commerce business easily if you have the right guidance to help you with all the business registration and incorporation formalities.
At Cekindo, we can guide you through the requirements and obligations of starting an e-commerce company and support you with a series of consultations and paperwork until your business is up and running.
The expert team at Cekindo will take care of all of your business incorporation needs with professional guidance and expansive connections.
We understand that there’s a lot of things going on while setting up a company in Indonesia and therefore you, as a business owner, are not in a position to deal with all these complicated rules and regulations that you must abide by.
But don’t worry – Cekindo has everything you need to start your business in Indonesia. Contact us by filling in the form below and one of our business incorporation specialists will guide you through all the processes.