Heaptalk, Jakarta — At the end of 2023, particularly on December 29th, Indonesia’s Finance Ministry issued a new policy regulating the implementation of cigarette and e-cigarette tax, or piggyback taxes. The Ministry’s Regulation (PMK) No. 143/PMK/2023 will be applied on January 1st, 2024, affecting the price of e-cigarettes.
By this regulation, the tax imposed on e-cigarettes is 10% of the excise tax on cigarettes. Moreover, the excise tax on e-cigarettes reportedly has increased by 15%.
According to the Finance Ministry’s official statement (12/30), Before the implementation of the regulation, the Government provided an adequate transition period for the industry to grow, which has been carried out since 2014 based on regulation No. 28 Year 2009.
The reformation of this policy is claimed to control society’s consumption of these products and to uphold the principle of justice, considering the conventional cigarette businesses have involved tobacco farmers and laborers for decades.
In addition, as cited from the Finance Ministry’s data, the contribution of e-cigarette in 2023 merely attained Rp1.75 trillion or about USD113 million (USD1 equals Rp 15,455). Imposing taxes on e-cigarettes is expected to escalate the state income.
Responding to this regulation, the Indonesia Personal Vaporizer Association (APVI) strongly refused this fresh policy. As cited from Katadata, APVI’s Chairman Garinda Kartasasmita said that the association has sent four letters to the Authority and requested a postponement of the policy implementation to 2027. He perceived that if this policy is implemented this year, it will hinder the growth of the e-cigarette industry in the archipelago.
“The imposition of tax on e-cigarettes at the end of this month was unanticipated and very shocking. The e-cigarette tax at this moment is extremely burdened us because it appears simultaneously with the significant increase of tax duties and retail prices,” voiced Garinda.
