It is almost impossible to import goods to one country without customs clearance as every country have their own custom duty department as to make sure no illegal activities or goods imported to one’s countries won’t harm the community or nations.
Custom duty clearance is needed as the main purpose of custom is to seek whether every goods imported have special clearance to one country.
Another purpose of customs clearance is to control the inflow of goods imported to one’s country so it won’t harm the local market or local producers from the nation where the goods imported to.
Sometimes the country needs to control the market price of the commodity in their country to the restricted oversupply of the goods that make the price of the goods decreasing due to more supply than demand.
Some commodities that imported to the country will directly increase the supply of particular goods in the market. The price of the commodity itself will decrease as too many goods in the market and will make the producer of typical same commodity from the country make a loss compare to the cost of producing it.
In the longer term, it might cost the local producers of the same typical goods suffer and will shut down the business due to loss of profit. For the longer term, it might affect the countrywide because the country will only rely on imports and the country that exporting the goods to a particular country might control the supply and price of the commodity.
Furthermore, another function of customs duty official is to protect the country from few types of animal that might have probability carrying virus or disease that will harm the nation and also dangerous plants that able to harm local produce commodity or farmers. The customs duty officer need to work together with the quarantine department in the front line at the borders and need to ensure that the goods, commodity, plant, animal imported to the country is safe.
Some case happened a few years back in regards to swine flu and bird flu that affects the whole world. Many restrictions happened in most of the countries with strict measures from custom duty agencies around the world as countries need to protect themselves from such an epidemic from animals carrying the virus that can harm population or some type of plant that can affect locally produce the commodity.
The role of customs duty department also crucial to help his or her country to increase the collection of tax and duties and in this case is from the importation of goods to the country. While you importing the goods to Indonesia, there are few taxes that you need to pay on top of import tax.
Few are VAT / GST tax of 10 percent from taxable amount, import duties 7,5 percent, personal or company income tax varies from 2,5 percent to 15 percent depending if you have complete documentation to import, then on top of that there are extra tax of 40-120 percent depending that whether your goods fall into the luxury category or not. Quite complicated compared to import some of the goods to maybe well-known transit country as Singapore, Hong Kong, Malaysia, etc.
Indonesia comes in at 108 out of 189 countries on the ease of trading across borders as to import the goods to. It takes approximately 99.4 hours to import a product or 4 days into Indonesia and the cost of an import average around USD 350 for containers.
The import tax system in Indonesia is more complicated than other countries as types of goods will affect the tax you need to pay with customs duty. The typical highest tax in Indonesia is luxury products that have luxury goods sales tax of 40 percent. Few types of goods that fell under this luxury tax such as
- alcoholic beverages
- tobacco products and such
- luxury vehicle and motorcycle
- essential oil and health-related product
- chemicals
- pharmaceutical products
- works of art
- arms and ammunition with permit
- garments for fencing and wrestling
- surgical gowns
- stretch limousines and cargo vehicles
- caviar
- luxury yacht
- aircrafts
- luxury properties
Rule of thumb of luxury goods tax is:
- the goods not for use or consumed by the general public
- only use or consumed by the certain community
- goods only use or consumed by the higher income community
- goods that use or consumed to show the status and social class
Here is some example of calculating luxury goods:
Example 1
Dony likes to buy a sports car from Singapore with the price of RP 900,000,000 to show his friends as a status symbol for him. With the regulation from the Tax and Customs Duties Agency, he needs to pay a luxury goods tax of 120 percent for luxury cars. His import tax calculation is (Dony has tax registration code):
Import Tax = 7.5% x 900,000,000 = 67,500,000
VAT (Value Added Tax) = 10% x 900,000,000 = 90,000,000
Income Tax 22 = 10% x Rp 900,000,000 = 90,000,000
Sales of Luxury Tax = 120% x Rp 900,000,000 = 1,080,000,000
Example 2
Tim wants to buy luxury watches from England. His order invoice stated Rp 180,000,000. How much the tax that Tim needs to pay? Tim does not have a tax registration code
Import Tax = 7.5% x 180,000,000 = 13,500,000
Income tax 22 = 20% x 180,000,000 = 36,000,000
VAT = 10 % x 180.000.000 = 18,000,000
Sales of Luxury Tax = 40% x 180,000,000 = 72,000,000
Total Tax = 139,500,000
In terms of payment method for the tax, few shipping companies able to help you to pay on your behalf with customs duty and you can use your credit card payment form of payment from the company.
Usually, only international shipping corporation that using this way such as FedEx, UPS, TNT, DHL but for local companies as Pos Indonesia or EMS, you need to pay cash on the pickup point if the goods already pass the clearance by customs duty officer as the only administrative amount needed to be pay.
The problem is arising when the customs duty officer is not satisfied with the documents produced as it is not compatible with the goods on the shipment (undervalue) or incomplete documents as few types of goods need special clearance from another department such as related health goods, food for animal, plants, etc.
As the shipper or recipient of the goods, you need to be responsible with custom duty officer demand and produce the complete documents required. The risk involved is your shipment might be confiscated, partially taken from your shipment, or your goods will be returning to the origin.
Here is the complete table in regards of the tax that you need to pay while importing to Indonesia.
Even though it would be a lot of effort needed to process the goods via custom clearance, the importer of the goods need to declare the goods as regulated in the country so the goods can be imported in a proper way, not through the back channel.
A few additional rules and regulation in regards to the customs clearance as referred to Indonesian Custom Website are :
- All cosmetics products need to have approval from BPOM (Indonesian Health Agency) as Information on Import Letter.
- When importing cellphone, handheld personal computers and computer tablets only allowed 2 pcs as regulated by Trading Ministry rules and regulations with custom need to be paid per shipment per recipient per day.
- Only able to import a maximum of 10 pcs of clothing per shipment per day as regulated by Trading Ministry rules and regulations.
- Electronic product only able to be imported maximum of 2 pcs per day per recipient as regulated by Trading Ministry rules and regulation
- All animal products, plants, fishes need to have import license from the Indonesian Quarantine Body.
- Firearms products, airsoft guns, and as such need to have a permit from the Police Department.
List of restricted items:
- Copier machine and products without a permit
- Dangerous materials for human health by direct on indirect use
- Unapproved pesticides
- Substances for Psychotropic activity without a permit
- Industrial waste without a permit
- Poison without permit
List of prohibited items:
- Grain or seed without a permit
- Medic Supplies
- Mineral or liquid products
- Explosive Products
- Narcos products
- Plant Seeds in a large amount
- Limited Tobacco products
- Beverages with alcohol or liquor.
- Sex toys and such
- Fireworks
- Gas and Petrol products
- Animal Skin and such
- Perishable items
- Pornography products
- Stuffed animal
- Gun or Weapon Replica
- Gambling devices
- Speargun and such
- Batteries and such
- CFC and related products
- Precious metal and mineral
- Therapeutic Products and such
- Endangered species and their products
- Nicotine Products
| Shipper that imported the goods via courier to received free tax declaration with a maximum invoice of the goods of USD 3 / day/ recipient. If the goods invoice between USD 3 – USD 1,500 there will be 7,5 percent tax applied and if the goods invoice is above USD 1,500, the recipient or shipper need to refer to the rules of limited importation and consult with custom immediately for referral on the process of importing the goods. |
How long usually the time for the goods to be cleared in Indonesian custom?
It is varies depending on whether your goods have a full set of documentation or the customs duty officer is satisfied with your presentation of your shipment. Few secrets from the industry are to have proper shipping package that is common and does not attract unnecessary attention from custom duty officer.
The usual time of clearance is between 3-5 working days since your goods in customs clearance. A longer period may apply if the customs duty officer need to have more data or document before clearance.
How come the packaging of the goods can make any difference in shipping to Indonesia?
The first measurement that the custom duty officer looks over is whether the goods coming from countries with a lot of cases on illegal activities. Custom duty officer will strengthen the check for the list of countries which have a high bad reputation for drug abuse, illegal drug trade, countries that produce a psychotropic drug, etc.
If the goods coming from the USA or any first world country, the custom officer will tend to seek or glance through the invoice and the commodity of the goods and scanned it through x-ray machine to determine the goods inside the package or when the custom duty officer in doubt, he/ she will open your package to have physical checks of the package to make sure it matches the invoice stated.
The package of goods plays quite an important role while shipping to the country. The package that in unusual shape of boxes might have a high chance of being open and scan through the x-ray machine to check it thoroughly.
Next, when the customs duty officer spotted some goods with bulky or big boxes as with the characteristic that the goods are for commercial and not for personal use, the customs duty officer will take a closer look on the package.
And more checks will be on few personal goods that label as gifts or online purchase with a small package as suspected of high-value electronics/ phones.
Few another type of packages that the customs officer will have closer look are the boxes with improper packaging that resulted from some leaks due to the liquid transportation or the package with a pungent smell that usually comes from perishable products, etc.
Well, it is important to learn how to pack properly as the basic foundation to ship your products and help your product secure.
Here are a few steps on how to pack your goods prior to shipping like professional
SindoShipping helps the customer to import their goods to Indonesia with a brokerage system with Indonesia custom, as we screen of every good that imported to Indonesia with maximum efforts as no illegal goods imported without declaring to custom.
Our system has been successfully implemented as the goods that through custom able to have clearance status immediately thus able to help customer received the goods as soon as possible after the customs clearance.
It is important for the customer to consult with our staff in regards of the goods imported to Indonesia to have a clear picture on how need to declare the goods to Indonesia without any problem with the smoother process with the custom and our company offer the service to each customer the brokerage with Indonesian custom.
Contact one of our professional staff to obtain more info in regards to shipping or just WhatsApp to 6281296055142. Sindoshipping- best shipping service to Indonesia as we have years of experience in the international shipping industry especially to the Indonesian market.