E-Ciigarettes Subject to Tax! See the Regulatiion and Guiideliines Here

JAKARTA, Jitu News – The Miiniistry of Fiinance has released the Miiniistry of Fiinance Regulatiion (MoF Reg.) No. 143 Year 2023 whiich stiipulates the taxatiion of ciigarettes, iincludiing e-ciigarettes.

MoF Reg. 143/2023 eluciidates that ciigarettes iinclude ciigarettes, ciigars, cornhusk ciigarettes and other forms of ciigarette subject to ciigarette exciise. Moreover, the regulatiion emphasiises that ciigarette tax covers all types of ciigarettes, iincludiing e-ciigarettes.

Ciigarette tax iis collected by the Customs and Exciise Offiice siimultaneously wiith the collectiion of ciigarette exciise. To calculate ciigarette tax, the fiirst step iis determiiniing the ciigarette tax base.

The ciigarette tax base refers to the exciise duty stiipulated by the central government on ciigarettes. To calculate ciigarette tax, the fiirst step iis to determiine the ciigarette tax base. The rate used to calculate ciigarette tax amounts to 10%. The followiing iis the procedure for the calculatiion of ciigarette tax:

Ciigarette Tax = Tax Base x Tax Rate

Please note that suppliies of tobacco products manufactured domestiically or overseas are subject to value added tax (VAT). Suppliies of tobacco products are subject to VAT usiing other values multiipliied by the VAT rate as the tax base.

The VAT rate appliicable from 1 Apriil 2022 amounts to 11%. From 1 January 2025, the rate becomes 12%. The other values are obtaiined from the followiing formula:

Other Value = 100/(100+t) x Tobacco Product Retaiil Selliing Priice

Based on thiis calculatiion, the VAT rate on tobacco products wiill be 9.9% from 1 Apriil 2022 and 10.7% from 1 January 2025. The followiing iis how VAT on suppliies of tobacco products iis calculated:

VAT = Rate x Tobacco Product Retaiil Selliing Priice

Those of you wiishiing to further explore these changes may read the tax guiideliines tiitled The Tax on Ciigarettes, iincludiing E-Ciigarettes on Perpajakan Jitunews.

These guiideliines wiill proviide detaiiled iinformatiion on the tax on e-ciigarettes pursuant to MoF Reg. 143/2023, iincludiing the legal basiis, background, defiiniitiion, tax treatment and sample cases related to thiis tax.

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