IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 17 Apr 2014 | Removal date: open ended
Still in force

Internal taxation of imports

On 17 April 2014, Indonesia increased the luxury-goods sales tax (LCT) from 75 per cent to 125 per cent. All so-called luxury cars are subject to the tax increase. The regulation defines luxury cars as vehicles with a gasoline engine of 3,000 cc and more or a diesel engine of 2,500 cc and more. Furthermore, motorbikes with more than 500 cc also fall under the new tax.
 
In theory, this measure does not discriminate between importers and local producers. Nevertheless the affected models are all cars from international brands like Jaguar, Land Rover, Lexus, Bentley because their products do entirely exceed the 2,500/3,000 cc limit. Consequently, the measure is very likely to target international brands only because these brands can not deliver cars that would be conforming to the new requirements, while Indonesian producers can. because they have smaller engines in their portfolio.
 
Therefore, this measure is selective and does, in reality, discriminate against certain importers. The Indonesian government confirms this view by stating that 'the tax is intended to curb import consumption as means to lower the countrys trade deficit.' (see aseanbriefing source)

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

491 Motor vehicles, trailers & semi-trailers; parts
8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02), including station wagons and racing cars.
870321 Of a cylinder capacity not exceeding 1,000 cc
870322 Of a cylinder capacity exceeding 1,000 cc but not exceeding 1,500 cc
870323 Of a cylinder capacity exceeding 1,500 cc but not exceeding 3,000 cc
870324 Of a cylinder capacity exceeding 3,000 cc
870331 Of a cylinder capacity not exceeding 1,500 cc
870332 Of a cylinder capacity exceeding 1,500 cc but not exceeding 2,500 cc
870333 Of a cylinder capacity exceeding 2,500 cc
499 Other transport equipment & parts
8711 Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without sidecars; sidecars.
871120 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 50 cc but not exceeding 250 cc
871140 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 500 cc but not exceeding 800 cc
871150 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 800 cc
871190 Other

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