What Is Government Borne Import Duty?

The government provides government borne import duty facilities for 42 specific industries affected by the Covid-19 pandemic. With these facilities, the government expects that the economy may recover faster through increased industrial productivity.

Formerly, through MoF Reg. 134/2020, the government provided Government Borne Import Duty for 33 industrial sectors affected by Covid-19. Other than to support industries affected by Covid-19, the government also frequently provides Government Borne Import Duty incentives to support the competitiveness of certain industries.

As such, what exactly is Government Borne Import Duty?
Government Borne Import Duty is the facility of import duty payable paid by the government with the allocation of funds stipulated in the State Budget and/or the Revised State Budget (Article 1 number 1 of MoF Reg. 68/2021; Article 1 number 1 of PER-10/2018).

Import duty is a state levy pursuant to the law imposed on imported goods (Article 1 number 15 of the Customs Law). Import duty is imposed on persons or entities admitting goods from outside the customs area (imports).

Thus, the Government Borne Import Duty facility renders the import duty that should be paid on imports of goods borne by the government. The budget allocation for the Government Borne Import Duty facility is stipulated in the MoF Reg. stipulating the Government Borne Import Duty sector.

The Government Borne Import Duty facility is generally granted to industries in certain sectors, namely industries eligible for Government Borne Import Duty according to national industrial development policies (Article 1 of MoF Reg. No. 248/PMK.011/2014 in conjunction with MoF Reg. No. 14/PMK..010/2018; Article 1 of PER-10/BC/2018).

In further detail, there are four assessment criteria of companies granted the Government Borne Import Duty. First, fulfiling the provision of goods and/or services for the public interest, consumed by the society at large and/or protecting the interests of consumers.

Second, increasing competitiveness. Third, increasing employment. Fourth, increasing state revenue. The determination of the weight of each assessment criterion is listed in Appendix I of MoF Reg. No. 248/PMK.011/2014.

Government Borne Import Duty is granted to imports of specified goods and materials. The said goods and materials may be finished goods, semi-finished goods and/or raw materials, including spare parts and components, which are processed, assembled or installed to produce goods and/or services.

To obtain Government Borne Import Duty, some terms and conditions must be fulfiled. Further, the party importing the goods must also apply for Government Borne Import Duty. Detailed provisions on the granting of Government Borne Import Duty are outlined in the MoF Reg. concerning the sectoral Import Duty Borne by the Government.

The MoF Reg. concerning the sectoral Import Duty Borne by the Government stipulates certain industrial sectors eligible for Government Borne Import Duty, terms and conditions that must be fulfiled and determines the amount of Government Borne Import Duty budget ceiling allocation that may be granted in a certain fiscal year.

The MoF Reg. concerning the sectoral Import Duty Borne by the Government is generally valid until 31 December of the current fiscal year. More detailed provisions on Government Borne Import Duty can be seen in MoF Reg. No 248/2014 in conjunction with MoF Reg. No 14/2018, PER-10/BC/2018, MoF Reg. 12/2020.

In addition to industries affected by Covid-19, the government also provided Government Borne Import Duty incentives to increase the competitiveness of the power plant component manufacturing industry (2009), sorbitol (2009), plastic packaging (2010), special toner inks (2010) and carpets (2010). (rig)