Government Regulates Tax Incentives to Boost Ease of Export

Tax and customs incentives provided to export-based companies show positive results in 2017
based on a survey conducted by the government in 2018. Hence, the government has once again
released the latest regulations regarding the ease of imports for the production of goods to be
exported (kemudahan impor tujuan ekspor/KITE) facilities which came into effect as of February 18,
2019.
KITE facilities can be classified into two types. First, the exemption from import duty and/or Value
Added Tax (VAT) or the non-imposition of sales tax on luxury goods (PPnBM) on the import of goods
and/or materials to be processed, assembled, or installed on other goods for export or supplied to
Bonded Zone (Kawasan Berikat/KB) or known as Liberation KITE. These facilities are regulated
through PMK No. 160/PMK.04/2018 (PMK 160/2018).
Second, the KITE facility of refund of import duty and/or excise paid for the import of goods and/or
materials to be processed, assembled, or installed on other goods exported or supplied to KB is
referred to as return KITE. KITE Facility Returns are regulated through PMK No. 161/PMK.04/2018
(PMK 161/2018).
In lieu of PMK No.254/PMK.04/2011 jo. PMK No. 176/PMK.04/2013 and PMK No.
253/PMK.04/2011 jo. PMK No. 177/PMK.04/2013, PMK 160/2018 and PMK 161/2018 are aimed at
deregulation and simplification of regulations, expanding the supply chain of materials as substitutes
for imported goods, expanding export production channels, accommodating the development of
business activities, and improving policies pertaining to KITE facilities.
Secara umum, melalui dua regulasi terbaru ini, perusahaan dapat mengajukan permohonan untuk
mendapatkan fasilitas KITE secara elektronik melalui sistem Indonesia National Single Window
dalam kerangka Online Single Submission (OSS). Selain itu, perusahaan juga tidak perlu untuk
mengurus Nomor Induk Perusahaan (NIPER). Sebagai gantinya, penetapan sebagai Perusahaan KITE
Pembebasan dan/atau Pengembalian akan diberikan secara langsung oleh Menteri Keuangan
melalui Keputusan Menteri Keuangan (KMK).
In general, through these two latest regulations, companies can submit applications to obtain KITE
facilities electronically through the Indonesia National Single Window system in the framework of
Online Single Submission (OSS). In addition, companies are not required to apply for Company
Registration Number (Nomor Induk Perusahaan/NIPER). Instead, the confirmation as KITE Company
of Exemption and/or Returns will be given directly by the Minister of Finance through Minister of
Finance Decree (Keputusan Menteri Keuangan/KMK).
Requirements for a company to apply for KITE facility are as follows:
a. the type of business is manufacturing industry;
b. having proof of ownership or proof of mastery over the location for production and
stockpiling of goods and materials and products for a minimum of three years for the;
c. having an adequate internal control system; and
d. utilizing computer-based inventory information system (IT inventory) for goods
management relevant to customs documents and accessible by the Directorate General of
Customs and Excise.
The ease of the two regulations is evident in the period of the approval or rejection of the facilities
application. Previously, approval or rejection of the application might have taken 45 days since the
submission, whereas based on the latest provisions, this process only takes one week after business
inspection and exposure by the company's board of directors to the Head of Regional Office or Prime
Customs and Excise Office of the Directorate General of Customs and Excise.
The technical provisions for these two incentives have also been issued by the Directorate General of
Customs and Excise through the Director General of Customs and Excise Regulation Cukai (PER
Dirjen Bea Cukai) in mid-February 2019. PER Dirjen Bea Cukai No. PER-03/BC/2019 regulates
Return KITE facility. Furthermore, the Exemption KITE facility is regulated through PER Dirjen Bea
Cukai No. No. PER-04/BC/2019.