Indonesia Plans New Tobacco Excise Layer to Combat Illicit Cigarettes

Strategic Move Against Illicit Tobacco Trade

Indonesia's Finance Minister, Purbaya Yudhi Sadewa, has revealed plans to introduce an additional layer to the existing Tobacco Excise (CHT) tariff structure. This strategic move aims to combat the prevalent issue of illicit cigarette circulation that has been causing significant revenue losses for the state.

Key Objectives of the New Layer

The primary objective of introducing this new layer is to create a pathway for illicit cigarette operators to transition into the formal market. By doing so, the government hopes to increase tax compliance and reduce the economic advantages currently enjoyed by illegal operators. The new layer is expected to provide a more nuanced tariff structure that can accommodate previously illegal manufacturers.

Current Status and Implementation

According to Purbaya, the proposal is currently under internal discussion at the Ministry of Finance. While specific details about the new layer's implementation timeline and exact tariff structure remain under wraps, the minister expressed determination to tackle the issue decisively. The introduction of this new layer represents a significant policy shift in Indonesia's approach to tobacco taxation and illicit trade prevention.