Regulation Update
Being Able to Self-Produce, Indonesia Cuts Import Tax Incentives for Medical Devices

Tuesday, 22 November 2022

Being Able to Self-Produce, Indonesia Cuts Import Tax Incentives for Medical Devices

The government cut the list of medical devices that get tax facilities, such as exemption from import duty and/or excise, Not-Collected Value Added Tax (VAT) or Sales Tax on Luxury Goods (STLG), and exemption from Income Tax Article (ITA) 22 on imports.

Through the Minister of Finance Regulation (PMK) Number 164/PMK.04/2022 which has been in effect since promulgation on 14 November 2022, the government only provides this facility for 16 groups of medical device products. (see table)

The regulation changes the previous provisions, namely PMK Number 34/PMK.04/2020 which has been amended three times. As for the latest amended regulation, namely PMK Number 92/PMK.04/2022, the government provides the facility to 26 groups of medical device products.

Number Group of Medical Devices
  Test Kit dan Reagent Laboratorium
1 PCR Test ex.3822.90.90
  Viral Transfer Media
2 Viral Transfer Media ex.3821.00.10
3 Viral Transfer Media ex.3821.00.90
  Finished Medicine Product 
4 Molnupiravir ex.3004.90.99
5 Nirmatrelvir/Ritnavir (Paxlovid) Pos tarif ex.3004.90.99
  Medical Equipment and Oxygen Packaging
6 Oxygen with tariff heading: 2804.40.00
7 Seamless steel cylinders for oxygen with tariff heading ex.7311.00.26, ex.7311.00.27, ex.7311.00.29
8 Pressure Regulators, humidifiers, flow meters, nasal oxygen canulla and other parts or equipment, with tariff heading ex.8481.10.19, ex.8481.10.21, ex.8481.10.22, ex.8481.10.91, ex.8481.10.99, ex.9019.20.90, ex.9026.80.00
9 Thermometer with tariff heading ex.9025.19.19
10 Oxygen Concentrator, Oxygen Generator, ventilator and other respiratory therapy devices with HS code ex.9019.20.10, ex.9019.20.20, ex.9019.20.90
11  Alcohol-containing tissue/cotton swab for an antiseptic (Alcohol Swab) with tariff heading ex.3005.90.90
12 Other swabs with tariff heading ex.9018.90.90
13 Thermal Imaging/Scanning Equipment with tariff heading ex.9027.50.00
14 in Vitro diagnostic equipment, including PCR test equipment with tariff heading ex.9027.89.90
15 Syringe dan infusion pump with tariff heading ex.9018.90.31
  Personal Protective Equipment (PPE)
16 N95 respirator mask with tariff heading ex.6307.90.90

In its consideration, the government stated that the reduction of products received facilities was carried out because some could already be manufactured in Indonesia. Thus, to encourage domestic industry, the provision of facilities for the import of goods must be cut.

Another reason is the determination of the number of products receiving the facility is also due to the enactment of the provision regarding the goods classification system, based on the Harmonized Commodity Description and Coding System or Harmonized System (HS) 2022 and the ASEAN Harmonized Tariff Nomenclature (AHTN) 2022.

However, the government still provides relaxation for some products to continue to get facilities according to the old provision. The relaxation only applies to medical device products that meet the following conditions:

First, for those that are directly imported, the import declaration has received the number and date of the notification document for the inward manifest (BC 1.1), prior to the validity period of the new rules.

Second, for goods imported from bonded logistics centers, free zones, bonded zones, bonded warehouses, special economic zones, and companies receiving the Import Facility for Export Purposes (KITE) facilities, the customs declaration for the release of goods has received a number and date of registration before the validity period of the new regulation.

If it meets one of the two criteria, then the provision of facilities is still valid.

Meanwhile, to obtain facilities, importers can apply to the Directorate General of Customs and Excise through the Customs and Excise Office where the goods are entered or released.

Application is submitted through the National Single Window (NSW) system and is accompanied by the identity of the applicant, a copy of the Taxpayer Identification Number (NPWP), details of the number and types of goods that receive facilities, and a description of the purpose of using the goods.

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