In late 2016, the Indonesian government issued Regulation No.182/PMK.04/2016 on the Importation of Consigned Goods (New Regulation). Consigned goods were previously regulated under the broader Ministry of Finance Regulation No. 188/PMK.04/2010 on Importation of Goods Carried by Passengers and Aircraft Crews and Across-Borders and Consigned Goods (Previous Regulation) which will become effective on 28 January.
This New Regulation was issued due to the necessity to regulate consigned goods specifically.
Who can import consigned goods?
The Previous Regulation stated that consigned goods are carried by Courier Services Companies (PJT) and Postal Operators. The New Regulation adds further detail on what parties can import consigned goods. According to the New Regulation, one addition to PJT is Designated Postal Operators, which are tasked by the government with providing international services for certain consignments as regulated by the government and as set out by the World Postal Association. The PJT and Designated Postal Operators together are referred to as Postal Operators. The Postal Operators are responsible for paying the import duty, customs and tax if the imported goods are consigned goods, except for goods that use a Notice of Importation of Specialized Goods (PIBK) or Notice of Importation (PIB) as their customs declaration documents.
The immediate impact comes in the form of an additional requirement for Designated Postal Operators to get approval from the Directorate General of Customs and Excise before they can operate as importers. Under Article 3 of the New Regulation, every Postal Operator needs to apply to the Directorate General of Customs and Excise for the approval.
Like Designated Postal Operators, PJT must obtain approval to operate from the Customs Office. If the Customs Office grants the approval, it will set the amount of the assigned security that the PJT must submit.
The procedures for the submission of the application to obtain the approval are set out in the New Regulation under Articles 3-6.
Amount of Assigned Security
The aim of this new provision is to increase the lead time of the customs clearance process.
As in the Previous Regulation, the PJT must provide a cash bond, a bank guarantee or a customs bond. The head of the Customs Office will determine the amount of the security with no time limit, based on the consideration of the amount of import duty, excise duty and tax on the import.
Article 6 of the New Regulation gives more clarity and is more beneficial for (and provides more certainty to) PJT, as they will know within three days the amount of security they must provide.
Import Duty and Import for Use
The changes of the calculation of import duty may be one of the most interesting features in the New Regulation.
Under Article 13 of the New Regulation, import duty and import tax will be imposed on goods as a whole if their customs value is higher than USD100. The Previous Regulation stated that if the customs value of the imported goods is higher than the value exempted from the current import duty (USD50), then the import duty and import tax will be imposed on the excess value of the goods.
Even though it may be easier to determine import duty and import tax, this poses a disadvantage to the importer (or tax payer) as the duty and tax may be higher than under the previous practice.
Based on Article 15 of the New Regulation, consigned goods in the form of postcards, letters, documents and specific consigned goods can be released from a Customs Area or any other place that is treated equally with a custom area as goods imported to use.
The goods can be released after the Designated Postal Operator submits a list of the consigned goods (not Consignment Note) that contains the quantity of the documents and the total gross weight to the Customs and Excise officials.
Waiver of Import Duty
On this provision, there appears to be an inconsistency between the initial concept of separation of provision of consigned goods and other provisions in the Previous Regulation (as briefly discussed above).
Article 14 of the New Regulation states that imports with a customs value not exceeding FOB USD100 for each importer per shipment are exempted from import duties. In addition, the following goods are also exempted from import duties:
- 40 cigarettes, 10 cigars, 40 gr of processed/sliced tobacco
- 350 ml of alcoholic beverages
Compared to the Previous Regulation, the New Regulation is of greater benefit to importers as it increases the exemption threshold from USD 50 to USD 100.
There may be duplication though, as the Previous Regulation also stipulated that exemptions for cigarettes and alcoholic beverages only apply for hand-carried goods.
The New Regulation significantly changes the concept of tariff that needs to be paid by the taxpayer or the importer.
Based on Article 20 of the New Regulation, goods with an FOB customs value of more than USD 100 but not exceeding USD 1,500 are subject to a tariff of 7.5% of the import duty. Meanwhile, the Previous Regulation stated that goods with an FOB customs value of more than USD 50 will be subject to import duty.
The impact of the New Regulation for importers is that goods with an FOB customs value of more than USD 1,500 will be classified as commodities. This would effectively require importers (both business entities and individuals) to have an import license unless they are able to prove that the goods are private goods.
The requirement to carry an import license is subject to the Customs and Excise officials' discretion.
In addition, based on Article 17 (4) of the New Regulation, Customs Supplementary documents, including regulatory compliance restrictions document or limitations must be submitted if the consigned goods are required to comply with any prohibition or restriction requirements.
The New Regulation adds the consignment note as a customs document, whereas the Previous Regulation only required the invoice, packing list, bill of lading or airway bill, and inward manifest. This may be interpreted to mean that importers must set out a description of their imported goods now that a consignment note is considered a supplementary customs document.
However, specific consigned goods do not need to be accompanied by a consignment note. As stated in Article 1 point 19, specific consigned goods, which are consigned goods other than postcards, letters and documents, sent by the Designated Postal Operator do not need to be accompanied by a Consignment Note.
According to Article 18 of the New Regulation, documents and physical inspections are applicable for all imported goods. Physical inspection is performed via an electronic scanner or by officials under any of the following circumstances:
- If the electronic scanner or other information creates suspicions that the amount and/or type of goods imported is not in accordance with the description contained in the consignment note.
- If the description of the quantity of goods, type of goods and/or the customs value listed in the consignment note document is not clear or is not listed in other complementary customs documents as complementary to the consigned goods.
If the Customs Office is not provided an electronic instrument or if the electronic instrument is broken.
Physical inspections of goods are witnessed by a relevant Postal Operators officer. For documents, the inspection is witnessed by the owner of the documents.
Documents and physical inspections were also applicable for consigned goods according to the Previous Regulation, the difference being that physical inspections are conducted selectively.
Based on the above inspection, in the event that the consigned goods:
- are in the form of postcards, letters or documents, the official who handles the consigned goods approves the expenditures and records them in Customs Record Book.
- have a customs value of up to FOB USD100 for each importer per shipment, the official who handles the consigned goods approves the expenditures and records them in the Customs Record Book.
- have a customs value exceeding FOB USD100 for each importer per shipment, the official who handles the consigned goods sets the tariffs and customs value.
- are required to comply with any prohibition or restriction regulations, the official who handles the consigned goods notifies the importer through the Postal Operator in order for the importer to deliver supplementary customs documents to fulfill the obligation of prohibition or restriction.
Documents for Releasing Goods
Article 16 of the New Regulation requires a consignment note for the release of goods with a customs value not exceeding FOB USD1,500. Based on Article 17 of the New Regulation, if (i) the goods have a customs value exceeding FOB USD1,500 or (ii) the importer is not a business entity that uses customs facilities in the form of import duty exemption or preferred tariff, a PIBK is required. In relation to Article 2 of the New Regulation, if PIBK is required for clearance of the goods, the payment of import duty, customs and/or import tax is the responsibility of the owner of goods.
PIBK can also be used for the release of goods if the goods have a customs value under FOB USD1,500, the importer is not a business entity, and it does not need to submit a consignment note. The Previous Regulation, on the other hand, referred to PIBK as the document required for the release of goods, effectively, for all consigned goods.
Article 25 of the New Regulation states that PIB can be used as a document for releasing goods with (i) a customs value exceeding FOB USD1,500 where the importer is a business entity, or (ii) an import duty exemption or preferred tariff. In addition, Article 26 also states that PIB can also be used for consigned goods with a customs value under USD1,500 (if the importer is a business entity). If the consigned goods can be released by PIB, the consignment note and the PIBK are not required to be submitted as the releasing documents. Under the New Regulation, it will be more difficult to measure the value of goods given the lack of comparison data concerning the value of imported goods. With the Previous Regulation, only the 100 kg-limit was used to determine whether a consignment note is needed to release the goods.
Impacts and What Needs to Be Done?
- Designated Postal Operators need to get approval from the Directorate General of Customs and Excise to be able to operate.
- Multinational companies will have to be more diligent with what they import to Indonesia as the New Regulation imposes several restrictions on what goods can be imported under the consigned goods category. For example, the Customs Office may not permit the importation of sample or promotional products.
- End consumers will not have as much flexibility to import goods from overseas, as they will be required to submit a PIBK if the goods meet certain criteria. For example, if they import goods with FOB customs value exceeding USD1,500 (as is the case with a lot of electronic goods), they may need to submit a PIBK to release the goods.