The newly enacted Law No. 7 of 2021 dated October 29, 2021, on the Harmonization of Tax Regulations (the "Harmonized Tax Law") amends several existing regulations on the Taxation Law and introduces several new regulations. As the Harmonized Tax Law adopts the Omnibus types (Law No. 11 of 2020 dated November 2, 2020, on Job Creation), its coverage includes the following: General Provisions of Taxes (Ketentuan Umum Perpajakan), Income Taxes (Pajak Penghasilan), Value Added Taxes (Pajak Pertambahan Nilai), Voluntary Disclosure Program (Program Pengungkapan Sukarela), Carbon Taxes, and Excise. This Newsflash explains the amendments relating to the Excise.

The Harmonized Tax Law amends several provisions of Law No. 11 of 1995 dated December 30, 1995, on Excise as lastly amended by Law No. 39 of 2007 dated August 15, 2007 (the "Excise Law").

Below, we set out the summary of the salient provisions of the Harmonized Tax Law relating to the Excise Law:

  • Excise Goods

The Harmonized Tax Law adds Electronic Cigarettes as goods subject to excise. Electronic Cigarettes are included in the tobacco products group.  The previous provisions only considered (i) cigarettes, (ii) cigars, (iii) sliced tobacco, and (iv) and other products of tobacco as the tobacco products subject to excise. The elucidation of Article 4 further explains that Electronic Cigarettes are products of tobacco in the form of liquid, solid, or other forms, resulted from the processing of tobacco leaves, served to end consumers, and consumed by electric heating.

  • The Expansion of Authority of Customs and Excise Officials

Under the Harmonized Tax Law customs and excise officials are authorized to conduct researches in respect of any alleged violation in the excise sector. If the result of a research proves an alleged violation in the excise sector is an administrative violation, then such violation will be subject to administrative sanctions.

  • Cessation of Investigations on Excise Criminal Acts

The cessation of investigation on excise criminal acts was previously regulated without any timeframe after a request from the Minister or the Attorney General. In the Harmonization of Tax Law, the cessation must be conducted within 6 (six) months after the date of a request letter made by the Minister or the Attorney General. The Harmonized Tax Law also stipulates that the cessation may only be conducted in respect of any criminal violation under Articles 50, 52, 54, 56, and 58 of the Excise Law after the concerned party pays the administrative sanctions with the amount of 4 (four) times of the supposedly paid excise value. If a criminal case has been transferred to a court, the defendant may pay the administrative sanctions and it will be a consideration to be prosecuted without imprisonment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.