Lately, Indonesian Government issued Regulation No. 61 of 2020 concerning on Non-Motor Vehicle Taxable Luxury Goods Subject to the Luxury Goods Sales Tax (“Regulation 61/2020”) which enter into force on 16 December 2020. The purpose of this regulation is to balancing the payment of taxes between low-income and high-income consumers and also to raise the taxes income from Indonesian tourism sector. This regulation will specify the new categories of non-motor vehicle luxury goods upon the imposition of Luxury Goods Sales Tax (Pajak Penjualan atas Barang Mewah “PPnBM”).
Regulation No. 61 of 2020 further repealed and replaced previous regulation that is Regulation of the Government No. 145 of 2020 which is amended several times as well through the issuance of Regulation of the Government No. 12 of 2006 (“Regulation 145/2000”).
Luxury Goods Categories
Hereunder the comparison of luxury goods categorization between Regulation 61/2020 and Regulation 145/2000:
| Tariff | List of Luxury Goods | |
| Regulation 61/2020 | Regulation 145/2000 | |
| 10% |
None |
(i) Household appliances, cooling and heating appliances, and TV transceivers, (ii) Sporting equipment, (iii) Air-temperature controlling machines, (iv) Recorders or picture reproduction equipment, radio transceivers and (v) Photography and cinematography equipment. |
| 20% | Imposed upon sales of luxury housing, including luxury houses, apartments, condominiums, townhouses and similar. | (i) Household appliances, cooling and heating appliances, and TV transceivers which were not categorized under the 10% PPnBM tariff, (ii) Luxurious housing, including luxury houses, apartments, condominiums, townhouses and similar, (iii) TV transceivers, antennae, and antennae reflectors, (iv) Air-temperature controlling machines, dishwashers, dryers, electromagnetic appliances and musical instruments; and (v) Scents and fragrances. |
| 30% |
None |
(i) Ships or other water vehicles and canoes, except for those used in the service of the state or for public transportation, and (ii) Sports equipment that was not categorized under the 10% PPnBM tariff. |
| 40% | (i) Hot-air balloons (steerable and non-steerable) and other unpowered aircraft and (ii) Ammunition for various types of firearms, except for that used in the service of the state. | (i) Alcoholic beverages, (ii) Leather or imitation-leather made goods, (iii) Silk and woolen carpets, (iv) Decorative lead-crystal glassware, (v) Goods which are partially or entirely made out of or coated with precious metals, (vii) Ships or other water vehicles and canoes which were not categorized under the 30% PPnBM tariff, (vii) Hot-air balloons (steerable and non-steerable) and other unpowered aircraft, (viii) Ammunition for various types of firearms, except for those used in the service of the state, (ix) Footwear, (x) Household and office furniture, (xi) Goods made from porcelain, Chinese clay and ceramics, and (xii) Goods that were partially or entirely made out of rocks (except for roadside pebbles). |
| 50% | (i) Aircraft which are not categorized under the 40% PPnBM tariff, except for those used in the service of the state and (ii) commercial air transportation and various types of firearms, except for those used in the service of the state. | (i) Carpets made from fine animal fur, (ii) aircraft which were not categorized under the 40% PPnBM tariff, except for those used in the service of the state and commercial air transportation, (iii) Sporting equipment which was not categorized under either the 10% or the 30% PPnBM tariffs; and (iv) various types of firearms, except for those used in the service of the state. |
| 75% | (i) Cruise ships, excursion ships, and similar water vehicles designed for human transportation, and all types of ferries, except for those used in the service of the state and for public transportation and (ii) Yachts, except for those used in the service of the state, or for public transportation or tourism purposes. | (i) Alcoholic beverages which are not categorized under the 40% PPnBM tariff, (ii) Goods which are partially or entirely made from precious stones and/or pearls or combinations of both and (iii) Luxury cruise ships/yachts, except for those used in the service of the state or for public transportation. |
From the comparison above, it can be inferred that Regulation 61/2020 implements a much more relaxed PPnBM system for luxury goods and usually only imposes PPnBM on luxury accommodation, water, and air transport facilities, and firearms, thus essentially excluding all else originally stipulated in Regulation 145/2000. As such, this policy should allow the public to participate in trade in items previously listed as luxury goods, including household appliances, electronic goods, furniture, and so on.
It is also important to note that if a yacht intended for tourism purposes is not used properly or transferred to another party within four years of its importation or purchase, then the exempted PPnBM referred to above and/or any underpaid Value Added Tax (Pajak Pertambahan Nilai “PPN”) relating to the importation/purchase of the said yacht becomes payable within one month of the said improper use or transfer. Failure to pay the PPnBM and the PPN referred to above would result in an administrative sanction being levied on the taxpayers concerned in compliance with the tax regulations in force.
This new Regulation confirms that further regulations relating to the determination of non-motor vehicle taxable products which are subject to PPnBM, as well as PPnBM exemption procedures, will be comprehensively discussed following the forthcoming Regulation of the Minister of Finance.
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